More Latinos are getting college degrees, but that also means they have more student loan debt and difficulty paying it off.
Will President Joe Biden cancel student loan debt? That’s what everyone is wondering. Well, the good news is that the option is very much on the table. The real question that remains is how much the president will forgive. So, what does that mean for Latinos? Let’s break it down.
Over the past 15 years, the number of Latinos 25 years and older with a bachelor’s degree has increased by at least 30%, according to the Census Bureau American Community Survey data released in February.
While the data shows promising information that proves more Latinos are seeking higher education degrees, the result means they will have more student loan debt than other groups. Data shows Latinos had faced economic challenges way before the pandemic crisis began.
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In 2019, according to data from the Federal Reserve, Latinos under the age of 40 struggle to pay off their student loan debt more than other groups. Data shows that an estimated 23% of Latino graduates that had gotten loans for college tuition and school expenses were behind on their payments. By comparison, only 6% of white students who had gotten loans for school had difficulties paying off their debt.
Further race and economic discrepancies show that 12 years after graduating college, Latinos who had taken out loans still owed 80% of their loan. Simultaneously, white students were able to pay off 90% of their debt, the Student Borrower Protection Center reports.
Just this week, White House Press Secretary Jen Psaki said that President Biden is considering canceling up to $50,000 of student loan debt per person. However, the president is leaning more toward canceling $10,000, according to the Los Angeles Times.
President Biden is also seeking Education Secretary Miguel Cardona’s advice about his legal authority to cancel student debt, the president’s chief of staff Ron Klain told Politico.
Whether the president forgives $10,000 or at most $50,000—the act of canceling any debt would be beneficial to Latinos. The typical amount of education debt in 2019 among those with outstanding debt from their education was between $20,000 and $24,999.
However, the Federal Reserve report shows that people with the least amount of debt had the most difficulty paying off their debt. An estimated 21% of borrowers with less than $15,000 of outstanding debt were behind on their payments, compared with 14% of those with $15,000 of debt or more. While data on student loan debt from 2020 has yet to be released, the economic crisis caused by the pandemic has undoubtedly had an adverse effect on student debt.
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“Black and brown borrowers, low-income borrowers, veterans, women. These are the folks who are disproportionately impacted by this crisis,” Ashley Harrington, federal advocacy director and senior counsel at the Center for Responsible Lending, told CNBC.
She added, “President Biden absolutely has the authority to cancel student debt. This is the same authority that was used by the Trump administration last year to waive interest and pause payments or for federal borrowers who had federally held loans. That same authority was used later that year to extend that pause. And then it was used this year by the Biden administration to extend that pause again through the end of September.”