Student Loan Forgiveness Is an Important Step Towards Prosperity
On August 24, 2022, the Biden administration ruled to cancel $10,000 in debt for federal student loan borrowers. President Biden’s decision will benefit borrowers by forgiving up to $20,000 in education debt, pausing federal student loan payments until January 1, 2023, and reforming the income-driven repayment plan (IDR) for undergraduate borrowers.
SaverLife believes that student loan forgiveness is a groundbreaking step to reducing the colossal burden of education debt that prevents borrowers from building generational wealth, especially for women of color and low- and moderate-income households. In a survey of nearly 700 SaverLife members completed in March 2021, we found that 67% of respondents owed a median of $38,500 on federal student loans. As SaverLife member Jamie N. explains: “I will be paying on my loans for years to come. I appreciate what I learned in my education, but I wish I didn't have this big debt millstone weighing me down.”
As a national fintech and advocacy nonprofit organization, our mission is to help low- to moderate-income (LMI) households turn their short-term savings into long-term wealth. Through our research, we’ve learned that 74% of SaverLife members don’t earn enough to set money aside for long-term investments like higher education or homeownership. Moreover, our research has shown that home equity is the largest component of asset driven wealth for communities of color. Yet, many SaverLife members are unable to afford home ownership because they bear heavy loads of student debt, impacting their credit and further ability to borrow.
Education and training can open the door to career pathways, higher-paying jobs, and ultimately to financial prosperity. Many SaverLife members save for their children so that they can open doors to a brighter future. But as costs and student loan burdens have skyrocketed in recent decades, higher education can be punishingly expensive. The student debt burden also falls disproportionately on Black and women borrowers for several reasons—one being that education often doesn’t lead to income parity after college. Addressing student loan debt and the rising costs of higher education are important and urgent to narrow the racial wealth gap.
SaverLife applauds the decision by the Biden administration. We also urge the Administration to do more. To help low-income borrowers and borrowers of color build a prosperous life for generations to come, they must do more to make higher education debt-free.
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Making higher education more accessible is just one pillar of SaverLife’s comprehensive policy agenda. If you’re interested in learning more about our advocacy efforts or research partnerships, please contact Radha Seshagiri, Director of Public Policy and Systems Change, at rseshagiri@saverlife.org.