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Chapter 2 The Staggering & Inequitable Burden of Student Loans

In \(2020\text{,}\) Joseph Biden, Jr., said during his winning campaign for U.S. President that he would forgive \(\$10,000\) in debt for all those who had taken out student loans. In June \(2021\text{,}\) in the Education Department's largest student loan forgiveness action currently in effect, it eliminated \(\$5.8\) billion in debt owed by \(560,000\) former students of the now-defunct for-profit Corinthian Colleges system, which collapsed in \(2015\) amid federal investigations and lawsuitsโ€‰19โ€‰.
One year later, on August \(24\text{,}\) \(2022\text{,}\) President Biden announced a plan that would forgive \(\$10,000\) for a subset of lower-income student debtors who had attended both for-profit and nonprofit colleges, then an additional \(\$10,000\) in student debt for an additional subset of highest-need borrowers. This plan was immediately controversial, quickly challenged by many Republican-led states, and unanimously blocked by the U.S. Court of Appeals for the Eighth Circuit on November \(14\text{,}\) \(2022\)โ€‰20โ€‰. This injunction preventing debt forgiveness from coming into effect was upheld by the U.S. Supreme Court, which heard arguments in February \(2023\) on the case.
Finally, on January \(10\text{,}\) \(2023\text{,}\) President Biden proposed a novel income-based federal student loan repayment planโ€‰21โ€‰. Why did President Biden feel the political impetus to forgive student loan debt? What were the political causes of and blowback to these debt forgiveness actions, and why were they so controversial? Whether or not Biden's loan forgiveness policy is overturned by the Supreme Court, what would its impacts be, and should future Presidents and legislators continue to advocate for student loan forgiveness?
In this module, we begin by attempting to understand student loan debt through an analysis of media and political claims and the academic literature. Specifically, we ask:
  • what are the causes of the current level of student loan debt?
  • who benefits from the high rate of student loan debt in the U.S.?
  • how does the load of student loan debt impact college students' and graduates' lives?
  • what factors, including time and the nonprofit status of a college, impact the burden of debt faced by students?
  • how do historical and present inequities, such as systemic racism, impact student loan debt load and default rates?
  • what is the federal government doing in response to the large amount of student loan debt in the U.S.?
References to explore: