These are the people who will lose the most if student loan forgiveness fails – CNBC

President Biden: 22 million people have applied for student debt forgiveness

Daniel De La Hoz | Ivory | Getty Images

Low and middle income persons

According to an analysis by the White House, 87% of the dollars forgiven under his plan would go to those making less than $75,000 a year.

Meanwhile, all individuals earning more than $125,000 would all be excluded from the exemption.

Those who can get the most debt forgiveness under the president’s plan — $20,000 — received a Pell Grant in college, meaning they also came from low-income families. Most scholarship recipients come from households with incomes less than $60,000, says higher education expert Mark Kantrowitz.

“This plan really helps low-income people across the board,” said Andre Perry, a senior fellow at Brookings Metro, said in a recent interview on The Current, a Brookings Institution podcast.

People of color

The student debt crisis is termed as a main factor for the wide racial wealth gap in the US today. As of the second quarter of 2022, black families own 25 cents for every dollar of white family wealth, according to to the Federal Reserve Bank of St. Louis.

Black college graduates owe an average of $7,400 more than their white peers Brookings Institution report found. And that disparity only gets worse over time: Black students owe more than $52,000 four years after graduation, compared to about $28,000 for the average white college graduate.

Wisdom Cole, the national director of the youth and college division of the NAACPrecently told Politico that if student loan forgiveness doesn’t come to fruition, it would be “an atrocity for borrowers across the country and hit black borrowers at a higher level.”

Women

Women were widely recognized as the biggest winner of Biden’s student loan forgiveness plan, as they are in debt two-thirds of the country’s outstanding student debt.

Research of the Education Data Initiative found that female student borrowers have an average debt nearly 10% higher than their male peers one year after graduation, due to the persistence of the gender pay gapit takes women an average of two years longer than men to pay off their student loans.

“Women will be most affected if loan forgiveness fails,” said Kantrowitz.

Older Americans

Inside Creative House | Ivory | Getty Images

As more and more people return to school later in life and student debt has become increasingly heavy and therefore more difficult to pay off, more people continue to have loans into their fifties, sixties and beyond.

In 1989, only 3% of families headed by someone age 50 and older had student loan debt, and their average balance was about $10,000, according to AARP. In 2016, nearly 10% of these older households still had student debt, and their typical balance rose to more than $33,000.

As a result, the student debt problem for older Americans is likely to get worse without the debt forgiveness, experts say.

Leave a Reply