The Biden administration’s historic plan to alleviate student debt for millions of Americans is a life-changing announcement for Latinos in particular. President Joe Biden is cancelling $10,000 in debt for student borrowers with an income under $125,000, and up to $20,000 for Pell Grant recipients under that same income level.
Under the plan, roughly a third of Latino students will see their school debt eliminated outright, Latino advocacy organization UnidosUS said. Early survey findings from the group just this month found that more than half of Latino respondents were first in their families to take out school loans. “This is a momentous development for those impacted by student debt, including millions of Latino and Latina borrowers,” said organization President Janet Murguía.
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“Most Latinos in postsecondary education come from low-income households and are the first in their families to go to college,” UnidosUS said Wednesday. “Despite nearly half of Latinos receiving a Pell Grant, they rely on filling the college affordability gap with loans. While Latino borrowers tend to borrow less on average compared to White borrowers, they are still prevented from wealth-building opportunities like owning a home, saving for retirement, or starting a business.”
The preliminary survey findings from earlier this month said that 38% of Latino respondents owed an average of $17,000 in debt. The overwhelming majority of respondents said they’d been unable to save for their retirement, and have been affected in their decision to buy a home. Sixty-six percent said they’d had to borrow money from family or friends to cover an emergency. “For those with student debt, this number jumps to 80%.” One-third said “do not feel confident” they can pay their debt over the next 10 years. Another one-third said they were now owing more than they’d initially borrowed.
"$20K will be very helpful," Pay Our Interns Executive Director Carlos Vera told NBC News. He said two-thirds of the $60,000 he has in school debt are federal loans, and at times he has made payments as high as $900 a month. "That means long term, I'm paying less—and then the second thing is it makes me feel a little bit better about potentially like, you know, going to grad school, or doing other life decisions that I probably couldn't beforehand."
“Providing debt relief at this unique moment to those who need it most will result in more Latinos reaping the economic benefits of a college degree, including the ability to build wealth through homeownership,” Murguía said. It could also be added relief for many Latinos who help financially support aging parents and siblings, and have been unable to build any wealth of their own. It is, in fact, a BFD.
“Biden’s moves could completely wipe clean student debt for 20 million out of the 43 million eligible people, according to administration figures cited by Biden and reported by The Washington Post, with 90% of relief going to people earning less than $75,000,” Daily Kos’ Laura Clawson reported Wednesday. “Thanks to the foresight of Senate Democrats in crafting the American Rescue Plan in 2021, student debt forgiveness will not count as taxable income.”
Clawson noted that a poll showed “55% support for canceling debt up to $10,000, with even stronger support among people aged 18 to 44 and Black and Hispanic people.”
“We applaud President Biden’s action which recognizes and addresses the widespread impact of excessive student debt on Americans’ financial well-being and on the economy,” Murguía said. “And this executive order will be a game changer for our community as Hispanics have disproportionately experienced financial harm from the burden of student debt.”
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