On February 28th, the People’s Rally for Student Debt Cancellation will take place in front of the Supreme Court in Washington, D.C., the same day the Court will begin hearing oral arguments regarding President Biden’s historic student debt cancellation program. Regardless of if you have student debt, you should support this policy because it has a positive economic impact for all Americans.

According to the Education Data Initiative (EDI), student debt greatly impacts the U.S. economy because consumer spending is directly linked to personal finance. EDI states, “Each time a consumer’s student debt-to-income ratio increases by 1%, their consumption declines by as much as 3.7%.” This debt then translates to less participation in the levers which drive the economy. A 2021 National Association of REALTORS study found that often buyers must choose between “investing in their retirement, purchasing a home, getting married, starting a family or general savings.” The same study found that those suffering from housing insecurity often also face food insecurity. 

As the cost to attend college becomes more expensive, growing at an annual rate of 7.78%, and the ability to buy a home has been compromised due to the increasing debt of students, the number of students and individuals suffering from food insecurity is a staggering 34 million people, 34% of which are college students.This number can be as high as 71% of “nontraditional” students, meaning students who may be enrolled part time, work full time while in school, be caretakers of dependents, etc.

Historically, going to college has meant better prospects for long-term earning potential, including marginalized groups and as a whole. Mostly, this is still true, with four-year degree holders earning on average $1M more over the course of their career than those with a high school diploma only. However, the student loan burden and earning potential is not distributed equally. The Consumer Financial Protection Bureau found that over 90% of African-American and 72% of Latinx students leave college with student loan debt, compared to 66% of their white counterparts, and 51% of Asian-American students. This debt, combined with the racial wage gap, continues to put students of color at a disadvantage when building a life following graduation.

That is why to help close the racial wealth cap and support the economic security for millions of people, we support the Biden Administration proposal of forgiveness of student loans. We are encouraging all of our 4,000 students, alumni, business leaders and community partners to join Food Recovery Network (FRN) at the rally on February 28th. Regardless of if you have student debt, you are impacted by those who do. 22% of those with student debt put off starting a small business, or buying a home, or having a family - all actions which drive economic growth. Put differently, if the 26 million borrowers who qualify for relief actually receive it, you will benefit from that relief as well because more money will be put into the economy at a time when it is much needed. 

Forgiving student debt is a substantial contribution our government can make today to improve the lives of the 42M people with student debt. This action would disproportionately benefit students of color, who carry more debt, but also benefit the middle class because it would begin the “long process of restoring access, solidity and racial equity to the middle class”, the exact promise a college education was originally meant to deliver. Owning a home, saving for retirement, starting a family, would all be more within reach for those who otherwise are putting off those major economic decisions because of student debt.

Poverty is a policy choice. Forgiving student debt is the economic choice.

Katie Jones is the Chief Operating Officer of FRN.

Sources: 

1. https://actionnetwork.org/forms/join-us-at-the-supreme-court?source=naacp

2. https://educationdata.org/student-loan-debt-economic-impact

3. https://www.nar.realtor/newsroom/student-loan-debt-holding-back-majority-of-millennials-from-homeownership

4. https://www.nar.realtor/newsroom/affordable-housing-concerns-and-food-insecurity-linked-nar-report-finds

5. https://www.forbes.com/advisor/personal-finance/college-students-food-insecurity/

6. https://www.feedingamerica.org/hunger-in-america

7. https://www.feedingamerica.org/research/college-hunger-research

8. https://www.brookings.edu/testimonies/the-student-debt-burden-and-its-impact-on-racial-justice-borrowers-and-the-economy/

9. https://www.gao.gov/products/gao-23-106041#:~:text=Overall%2C%20women%20earned%20about%20%24.,every%20dollar%20White%20men%20earned

10. https://www.cnbc.com/2023/02/18/what-a-deeper-than-expected-recession-means-for-your-money.html

11. https://www.brookings.edu/policy2020/votervital/who-owes-all-that-student-debt-and-whod-benefit-if-it-were-forgiven/

12. https://www.vox.com/the-goods/22297809/student-loan-debt-cancel-forgiveness-middle-class