Forgiving at least some student loan debt is one of the few popular policy ideas that President Biden could implement on his own with the stroke of a pen. A recent national tracking poll from Morning Consult and Politico found that 64% of respondents supported the idea. Yet when the president announced on Thursday that he is "considering dealing with some [student] debt reduction," it was clear that he hasn't yet recognized the urgency of this issue. President Biden's announcement came with an immediate caveat: "I am not considering $50,000 debt reduction," he said in reference to last month's proposal from Senators Chuck Schumer, Elizabeth Warren and others.
Interest keeps the borrower in a cascading cycle of debt, from which they are often unable to escape.
The president made a mistake by ruling out canceling $50,000 of student loan debt per borrower. But even if he changes course and does so, that alone would not solve the key problem behind the student debt crisis.
In 2021, the student loan debt collectively owed by 45 million borrowers reached a record $1.7 trillion. This number is projected to increase to $2 trillion by 2024 and $3 trillion by 2038. Add to this crippling debt the skyrocketing prices of housing, healthcare, food, gas and other essentials, and it's not surprising that a quarter of borrowers are currently estimated to be in default or delinquency on their student loans. According to a Brookings Institute report, that number is expected to rise to 40% by 2023—and that report was conducted prior to the COVID-19 pandemic.
One of the primary reasons why student loan debt is so damaging to so many millions of Americans is the presence of interest. Interest keeps the borrower in a cascading cycle of debt, from which they are often unable to escape. Interest on student loans is particularly predatory because it tends to target individuals who are just starting out in life. Before they are able to secure jobs and careers, millions of Americans are being saddled with debt they may never have the means to pay off.
The interest is the problem. That's why dozens of Muslim organizations called on President Biden to waive all interest payments on current and future loans by establishing principal-only loans, in addition to extending the moratorium on payments until January 1 2023 and forgiving borrowers whose repayment history equals or exceeds their principal.
Implementing this proposal would not only provide much needed relief to the millions of Americans caught in the debt trap and offer borrowers an affordable way to pay back their student loans, it would also provide a boost to the economy at a time of significant inflation and instability. Broad student loan debt forgiveness would also advance racial justice, as 48% of Black students owe an average of 12.5% more than what they initially borrowed. Black and Latino students are also more likely to default on their loans than students from other communities.
Ending interest-based debt would be a positive step toward empowering students from communities of faith. Islam, Christianity, Judaism and other religions prohibit usury as a destructive and immoral practice. This means that many students of faith are forced to either delay higher education or compromise on their values. Principal-only loans would enable them to pursue their education freely and without taking on debt that conflicts with their firmly-held beliefs.
Student loan debt has been a burden and source of suffering for millions of Americans for decades. People and organizations have been calling for student loan reform for just as long, and for the first time, those in power are unable to ignore them. But President Biden will not be able to solve the crisis at hand or satisfy the demands of the American people with a half-baked approach. It's time to remove the burden from the backs of the American people—it's time to put an end to interest-based student loan debt.
This content originally appeared on Common Dreams - Breaking News & Views for the Progressive Community and was authored by Robert McCaw, Ismail Allison.