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College affordability, student debt repayment and the need for new systems


Recently, President Biden announced his Administration’s new plan to cancel student debt for tens of millions of Americans.

If implemented, the multiple-pronged plan would provide much-needed debt relief to more than 30 million Americans, benefit the economy, and create pathways for low—and middle-income families to participate in generational wealth building.

The details of the plan include:

  • Canceling runaway interest for millions of borrowers
  • Automatically canceling debt for borrowers eligible for loan forgiveness under SAVE, PSLF, closed school discharge, or other forgiveness programs but not enrolled
  • Canceling student debt for borrowers who entered repayment over 20 years ago
  • Canceling student debt for borrowers who enrolled in low-financial-value programs
  • Canceling student debt for borrowers experiencing hardship paying back their loans

All should welcome these changes. The student loan system has been deeply broken for quite some time.

Securing a postsecondary education or credential is still the most reliable pathway to the middle class and to making cities and states more economically competitive.

Research has proven a strong, positive correlation between educational attainment and per capita income. For many years, economists have elevated “The Talent Dividend,” the idea that raising a metro area’s educational attainment is the key to raising productivity, living standards and incomes for both individuals and cities. Essentially, each additional percentage point increase in the four-year college attainment rate, permanently increases metro per capita income by $1,250. When we consider urban economic development, post-secondary attainment isn’t just beneficial to the individual. There is substantiated evidence that communities and municipalities financially benefit from an educated population, too.

Nonetheless, the rising cost of college is a barrier for those seeking well-paying jobs that require a degree. How can we expect Americans to purchase homes, open small businesses, and meaningfully participate in the economy if they are burdened with student loan debt that continues to grow even after years of repayment?

Public higher education has been the foundation of much of our nation’s prosperity since 1862, when President Lincoln signed the Morrill Act creating public land grant colleges.  But since the 1970s, we have seen the gradual de facto privatization of public higher education as state governments have cut funding for public colleges and universities, resulting in a half-century of higher education’s costs increasing well above inflation.  With 68 percent of all US jobs requiring a postsecondary education, a postsecondary credential is now critical to prospering in the 21st century. To make up for the decline in state funding, students and families have had to accrue ever-increasing debt to pay for college.

Moreover, for a variety of reasons tied to historical and structural racism, people of color are disproportionately more likely to have student loans, and to have larger loans, than their white peers. In effect, the policies of the last 50 years have seen the gradual de facto privatization of significant parts of state public higher education, effectively flipping the goal of higher education on its head. What was traditionally one of the best ways to improve social mobility is increasingly becoming a barrier to it because of cost.

Higher education affordability and financial aid policy isn’t sustainable and is far from equitable. It’s time we reestablish college affordability to ensure students and their families can afford to enroll in college and graduate when they do.

In addition to supporting grantee partners like Young Invincibles and Civic Nation to conduct outreach to implement changes on student loan debt repayment rules, Kresge has convened two webinars dedicated to helping partners learn about Public Service Loan Forgiveness and SAVE plans. We also have supported policy research and innovative programs — from College Promise and Achieving the Dream, to the University Innovation Alliance — that have looked at reducing the cost of postsecondary education while ensuring that students actually complete their degrees when they enroll.  We look forward to continuing our commitment to helping change America’s higher education system to benefit everyone.

It is vital, both for millions of individuals and our nation as a whole, to ensure that the hope and promise of affordable higher education is restored as a vehicle for individual social mobility and national economic prosperity.  Reducing student debt is a first step.”