Roughly 45 million Americans are whittling away at a mountain of debt totaling $1.7 trillion with monthly student loan payments – including more than 3.6 million Texans, according to the Education Data Initiative. Of that $1.7 trillion, Texans owe roughly $120 billion, with an average student loan debt of $33,000.
On Wednesday, President Joe Biden announced he’s canceling up to $10,000 in student loan debt for borrowers earning less than $125,000 or households making less than $250,000. Pell Grant recipients may be able to get up to $20,000 total debt forgiveness.
Benjamin Wermund, Washington correspondent for the Houston Chronicle, took a look at how the policy will impact Texans and joined the Texas Standard to share more.
This transcript has been edited lightly for clarity:
Texas Standard: Only around a third of Texans over the age of 25 actually have college degrees – with that in mind, will the average Texans see a benefit from this policy?
Benjamin Wermund: It sort of depends on what you consider to be the benefits of the policy. Obviously, the direct benefits, the forgiveness, are only going to go to a portion of the 3.6 million borrowers who live in Texas – so obviously not the vast majority of Texans. But at the same time, the president has argued that this could potentially help those people kind of get on their feet, start businesses, buy homes and boost the economy, which could have an effect elsewhere.
But that has been kind of a key argument against this that you’ve heard from Texas Republicans especially, is that the vast majority of American adults and Texans do not have student loan debt. So they see this as basically forcing those other taxpayers to subsidize this forgiveness for the people who do.
In his announcement Wednesday, President Biden took special note of the fact that the student debt load has a disproportionate effect on minorities and persons of color.
Right. This has been cheered by advocates and supporters as a major sort of racial justice action. The White House says that the average Black borrower will see their student loan balance cut in half, and a quarter of them will have their debt forgiven altogether. Students of color just typically have to take out loans more frequently and tend to have to take out more when they do. So yeah, the argument is that this will help sort of narrow the racial wealth gap.
There’s an economics argument to be made here as well, that when you reduce that mountain of debt, you free up potential money that could lubricate the economy in other ways. I guess that’s something that Democrats especially are trying to talk a lot about.
Yes, absolutely. And it was a very key part of the president’s sort of reasoning for this that he laid out yesterday, which is, you know, a lot of college graduates have potentially delayed buying homes or starting families or haven’t been able to invest in businesses that they want to start, things like that. And by clearing some of that debt out of the way, they might actually be able to do those things. Biden compared this also to the pandemic relief that was offered to small businesses, the paycheck protection loans that were mostly forgiven, and essentially said “nobody complained when that happened. Now it’s time to address student debt in the same way.” So he’s he’s making a pretty direct economic argument for those.
Of course, you can’t overlook the fact that there’s politics certainly at play here with midterms coming up. I’m curious, what do you make of the timing of this announcement?
The timing has definitely been noted by a lot of Republicans. I think most of the Texas Republicans I saw yesterday were mentioning that John Cornyn called it an election-year stunt to force working-class folks to pay off debt of wealthy graduates. So obviously, that’s been picked up on. You know, this was a campaign promise for for Biden, and so he is keeping good on that. And the announcement is just as we’re nearing the midterms, when Democrats are going to be trying to make the case to voters that they’re helping the working class. Obviously, this program is tailored to go toward lower- and middle-income borrowers. So you’ll hear it mentioned quite a bit, I’m sure, on the campaign trail.
Bottom line, is this going to have a big impact for Texas and Texans?
It certainly will have a big impact for Texans who have student loan debt. It will be a sort of a wait and see in terms of the broader effects, if it does have that sort of economic boost or provide the economic boost that Biden and the Democrats say it will. That’s sort of a longer-term thing that we’ll have to watch.