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As a first-generation Brazilian-American woman and college graduate, I know what it is like to feel anxious about having student loan debt. I, like the more than 44 million Americans currently affected by student debt, had to take out student loans to pay not only for college tuition but also for the cost of living on campus. After I graduated, I struggled to find a sustainable job in my field. My student loans have limited my career choices and my ability to pursue job opportunities out of state.
And while this story is all too common, Latinx and Hispanic borrowers like me have a very different experience from other borrowers’. In my work for the organization Student Debt Crisis, I’ve heard from many people who have had to rearrange their lives around student debt. One story that I heard during a virtual listening session for recipients of student loans was that of an immigrant single mother. She told us about coming to this country in search of a better future and taking out student loans for college. Now, she told us, she is also helping her two adult children pay off their loans. Because of the economic crisis caused by the pandemic, her hours have been reduced; she is making just enough to sustain herself and her family. The federal pause on student debt repayment has been a lifeline to her, she said, but she worries about what will happen once payments resume.
During the pandemic, Latinx workers were the ethnic group in the United States most likely to have lost jobs, had hours reduced, or been unable to find jobs. My experience and this mother’s illustrate how for millions of Latinx borrowers and families the burden of student loans only adds to their worries and uncertainties. Latinx borrowers with loans are already more likely than other racial groups to postpone making life-changing decisions, such as getting married and having a family. Instead, they are forced to put their lives and dreams on hold, starting a cycle that contributes to the ever-increasing racial wealth gap, where the median net worth of white families is about eight times that of Hispanic families.
One way to provide some relief to Latinx borrowers would be through student loan debt cancellation. On September 17, 2020, Senators Chuck Schumer and Elizabeth Warren introduced a resolution calling on President Biden to cancel up to $50,000 per borrower to provide equitable relief to those who need it the most, especially within communities of color. Over 325 organizations wrote a letter urging the president to use executive action to cancel student loan debt. “The impact of student debt cancellation will be far reaching,” wrote UnidosUS Associate Director of Education Amalia Chamorro in support of the resolution. “It will not only allow Latino borrowers a new financial start but address the racial wealth gap that so often prevents Latinos from moving up the economic ladder.”
About 72 percent of Latinx students take out loans to attend college, with the median Latinx borrower still owing 80 percent of their debt balance 12 years after graduating. Hispanics are the youngest major racial or ethnic group in the United States, with close to 60 percent being millennials or younger. About 30.8 percent of millennial and 31.4 percent of Gen Z Latinx have student loan debt, and these numbers are expected to grow in the coming years.
With these existing disparities, Latinx individuals and other borrowers of color are forced to incur more student loans to pay for tuition, books, and the cost of living. In 2016, the median household income of a Latinx family was calculated to be $46,882, somewhat less than the average white family’s $63,155. The median wealth, however, was $20,600 for a Latinx family and $175,728 for a white family. In Latinx-majority ZIP codes, the default rate is estimated to be around 13 percent. Defaulting on student loans can result in damaged credit scores, making it even harder to buy a home or car and putting you at risk for wage garnishment and withheld tax refunds, only causing further economic harm.
And these disparities go on to affect the next generation. A family burdened with student debt is already operating at a disadvantage; their children will likely have to take out even more student loans. That possible debt burden deters many students from even choosing to go to college.
Lately, the Biden administration has begun taking action to help some student borrowers. Collections have been paused for borrowers who defaulted on their student loans, and interest rates for these loans have been set to zero. Under the Borrower Defense to Repayment Program, students who had been defrauded by their colleges received about $1 billion in relief. The Department of Education has also provided some relief for borrowers with total and permanent disabilities. With the pandemic having had a disproportionate effect on communities of color, especially within the Latinx community, I was grateful for the federal pause on student loans, but I, along with millions of student borrowers, know that this is just a delay. Borrowers like me are left feeling uncertain about the future.
Broad-based student debt cancellation would be a lifeline to many Latinx borrowers and their families. Cancellation of up to $50,000 per borrower would be especially beneficial to Latinx borrowers, who tend to make up the largest portion of those who owe less than $20,000 in student loans. Forgiving student loans would allow Latinx families to invest in their families, in their dreams, and in their communities. Cancellation through executive action would help to reduce some of the inequities and disparities for millions of individuals who were promised a bright future but were left with thousands of dollars in debt.
President Biden recently asked Department of Education Secretary Miguel Cardona, the second Latino ever to hold the position, to provide him with a memo on his legal authority to cancel up to $50,000 in student loans per borrower. Earlier this year, Cardona even stated that tackling student loan debt “would be a priority for me. It would be an area of focus that, early on, we’d have to really make sure we’re coming up with clear support plans and strategies.”
Above all, we should remember that student debt is both a racial and an economic issue. Cancelling student loan debt would help millions of Latinx individuals and families like mine. My parents came to this country in search of a better life for themselves and for their future family. They worked to give that to me: I am the first in my family to graduate from college. But student loan debt is holding me, and so many others like me, back. Cancellation, rather than postponement, would allow me to be more financially independent and invest in my future. It would give me the opportunity to save up for a car, build a life, and, most importantly, it would be one less issue for me and my family to worry about. Just as my parents did, I want a better life for myself and my family. Canceling student debt would ensure that a better life didn’t come with debilitating strings attached.
Want to help? Advocates at Student Debt Crisis, NAACP, Generation Progress, NextGen America, Center for Responsible Lending, and Young Invincibles are working to amplify the voices of people impacted by student debt by launching the #CancelStudentDebt Voices Project. Over 7,250 people have joined in by sharing their story during a Virtual Town Hall Event with Senate Majority Leader Chuck Schumer. Share your story here or click here to learn more about the project.