Judy: President Biden has
indicated he will soon announce
a decision on whether he will
cancel $10,000 of student debt
for college graduates.
It is a decision being widely
anticipated but also a much
debated one over at scope and
merit.
On an of oz looks at this -- our
reporter looks at this debate.
Reporter: The total outstanding
student loan debt has doubled
since 2008.
It is now more than 1.7 trillion
dollars and most is owed to the
federal government.
More than 43 million Americans
owe student debt.
It is disproportionately
burdensome to graduates of color
particularly black graduates who
owe $25,000 more on average than
their white peers.
President Biden is considering
forgiving up to $10,000 of
student debt, less then what
many had advocated for and
reportedly with income caps
limited to borrowers earning
less than hundred 25,000 dollars
a year.
Some experts argue even that
goes too far and will not solve
fundamental problems with
college costs.
We look at does whether
Catherine who was with the
student barware protection
program and mark who is with the
committee for responsible
federal budget.
I'll come to you both and thank
you for being here.
I want to hear from both of you
about what you think about that
proposal so far.
>> Thank you for having me.
First, we are broadly in support
of debt cancellation.
A lot of what you just outlined
about the importance of the
president upholding the promises
of trying to achieve greater
racial equity through this plan
but also thinking broadly about
how we have so many broken
programs throughout our student
loan system.
We are seeing over decades how
these piecemeal fixes have not
worked and we need a clean slate
to build a foundation to build a
better student loan system
including fixing the broken
programs.
>> The problem is not the
student loan programs rather
college affordability.
We already have very high
deficits and we have the highest
inflation in 40 years which this
would make worse and these
benefits would mostly go to
students in the top part of the
income ladder.
We did the math on this.
It cuts off the wealthiest but
it does not cut off a lot of
people that are high earning.
And it does not --
>> I think student -- when we
think about the fact that
wealthy people do not take on
debt to attend college.
We are thinking about the fact
that debt cancellation affects
many load middle income
borrowers.
A lot of people that went to
school and that did not get a
degree but still have debt.
We talk about that argument and
we ignore the experiences of so
many borrowers but we are also
talking about race and equity
and we are missing the fact of
how much debt affects black
borrowers.
10 years after repayment, black
barware still owe 20 some
percent.
Reporter: It does not help
everyone but it can help those
that really need edge.
When you look at the statistics.
The correctional black caucus
put out -- the congressional
black caucus put out a statement
today.
Saying this disproportionately
affects black communities across
the country.
>> The way -- the way to deal
with racial equity is college
affordability.
The 25% wealthiest -- excuse me.
White Americans in the top 20%
of the income spectrum has more
debt then black Americans.
80% of Americans have no -- 80%
of black Americans no college
debt.
Reporter: I want to ask about
that $10,000 limit.
That is a lot less than a lot of
people were asking for and
pushing for.
What kind of actual difference
given average in-state tuition
for college is over $10,000.
One year.
How much of a difference is
$10,000 going to make?
>> There are for many millions
of borrowers who might be in
default or those that have lower
balances -- it is life-changing.
For so many more borrowers, they
won't reap the benefits of that
cancellation.
If we are talking about how do
you create a new foundation to
rebuild a better student loan
system if you don't reach the
higher amounts, 50 K is where
you would really see an effect.
30 K, erasing debt for more than
30 million people.
You have to think about the fact
of how broad we want this to
reach if we are going to rebuild
a better system?
Reporter: If it is only $10,000,
what kind of impact or what
difference does that make?
>> It does make some but not
that significant event effort if
we are going to say we have a
broken student loan system.
We have to be willing to commit
to making a better system.
Not significant enough for us to
make those specific changes we
are hoping for.
Reporter: Part of this
conversation is that there has
been income driven repayment
systems.
Why are they not working?
>> If we are going to fix the
student loan system we should
fix the system.
Doing so by executive order
won't do much of anything.
We estimate that will be back
where it is in three years time.
The system now is not perfect.
There are too many different
programs.
But we have not gone to
completion with them because
they are pretty new.
We should be working with the
congress and the president to
unify the systems.
President trump and president
Obama had similar proposals to
do just that.
Reporter: You have laid out a
few knock on impacts.
The inflationary impact.
Some argue that if you reduce
the debt burden now, that helps
them participate in the economy
and a could help the economy.
Is there something to that
argument?
>> That argument is why this is
inflationary.
We have an overheated economy.
Anything we do that gets people
to spend more now as opposed to
putting it toward paying down
their debt or saving will make
inflation worse.
We have estimated full debt
cancellation what at a half a
point to the inflation rate.
Reporter: What needs to happen?
>> Both president Obama and
president trump had plans to
unify the system.
I think we should be looking to
those types of ideas.
More fundamentally, we need to
look at college affordability.
If everyone thinks the president
will cancel $10,000 in debt
every four years, there will be
an incentive to raise tuition
and we will be in a worse
situation.
Reporter: What would you say to
that?
>> Regarding the inflation
point, it is important to note
that when we think about larger
drivers of inflation, the war in
Ukraine, supply chain issues,
covid, it is also important to
note the way student debt
cancellation works as a
stimulus.
This is people seeing monthly
more money in their balance
sheets because they will not
have as much student loan debt.
It is not an immediate injection
of that money into the economy
so it would immediately overheat
it.
It is people will have more
money to help them as they
struggle with rising costs right
now.
The important part talking about
current plans, we have tried to
fix it and we have seen
piecemeal plans.
The reason they don't work is
[indiscernible]
Only we have seen since 2021 a
little over 100 people have
received cancellation of their
program.
It is not working.
We have to acknowledge these
programs do not work.
We need a larger systemic change
to fix the broken systems.
Reporter: I feel like we will
have you back for another
conversation very soon.
Thank you so much.