[ad_1]
Without a parallel effort to curb the growth in tuition fees, a one-off debt relief could actually lead to higher higher education debt in the future as students borrow more in the hope that the government would eventually wipe them away, a “moral hazard” , that often accompanies one-off interventions. And it would be expensive: borrowing as much as $ 10,000 per person would save more than $ 400 billion in national wealth, although calculating the real cost to the Treasury Department is difficult due to the long payback time and high default rate on student loans.
Mr. Looney said that Cancellation of $ 50,000 at an estimated cost of $ 1 trillionThat would be “among the largest transfer programs in American history,” akin to decades of targeted spending on programs exclusively for low-income families, such as the $ 992 billion spent on federal Pell grants since 1972 , and the $ 1.4 trillion spent on welfare since 1975.
If debt relief were to flow disproportionately to better-off Americans overall, even modest debt relief would help many financially vulnerable people, especially people of color. Student has debt burden tripled since 2006 and eclipsed both credit cards and auto loans as the largest source of household debt outside of mortgages, and much of it falls on black graduates owe an average of $ 7,400 more than their white counterparts at the time they left school. Black borrowers also default on higher interest rates.
College dropouts, especially those who attended nonprofit schools, often end up Caught in debt that they can’t afford to pay back.
“At this moment of the national reckoning of racial injustice, the president-elect must cancel all federal student debts on the first day of his term in office,” said Ayanna Pressley, Democrat of Massachusetts representative, in a statement. “The elected president has to meet right now. If he doesn’t make it, we’ll hold him accountable. “
An economic one Roosevelt Institute working paper raises debt relief specifically in relation to racial justice. The overall percentage of black households that would benefit would be higher than that of white households, and the relative gains for those households’ net wealth are far higher, the researchers found. The greatest marginal gains come from the reduction of the smallest debt; Wiping out $ 20,000 would end student debt for half of all credit households.
New York Senators Chuck Schumer, Democratic leader, and Elizabeth Warren, Democrat from Massachusetts, said in a joint op-ed last week that $ 50,000 debt relief “would give black and brown families across the country a far better chance of achieving financial security” and would be “the most effective single executive available to give our economy massive boost.” to give “.
[ad_2]
