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Does canceling student loan debt actually help those in most need?

Biden dismissed calls to cancel $50K loans Tuesday
President Joe Biden
Posted at 2:48 PM, Feb 17, 2021
and last updated 2021-02-17 15:27:22-05

WASHINGTON — The debate over student loan forgiveness is intensifying following President Joe Biden's comments during a CNN town hall Tuesday.

Biden rejected a questioner's request to cancel $50,000 in student loans.

"I will not make that happen," Biden said.

Sen. Chuck Schumer (D-NY), along with progressive lawmakers, have called on Biden to issue an executive order canceling $50,000 in debt.

"All you need is the flick of the pen," Schumer told a crowd in New York in December, defending his policy position.

WHAT DOES PRESIDENT BIDEN SUPPORT?

Biden has not completely dismissed the idea of canceling some form of debt.

White House Press Secretary Jen Psaki tweeted recently that the administration is reviewing possible executive action.

Biden has previously said he would support congressional action to cancel debt, and has supported the cancellation of up to $10,000 of student loan debt.

WHO DOES CANCELING DEBT HELP?

Renee Nicole Allen is an American with a student debt profile that may leave you shocked.

Between her bachelor's degree, law degree and additional education, she accumulated around $385,000 worth of student debt.

"I don’t know how much foresight an 18-year-old has," Allen said.

She says she's since paid off some of that debt, and currently owes about $265,000.

"That doesn’t feel any better actually," Allen said with a laugh. "I maxed out by forbearance and deferment very early on."

While debt cancellation would no doubt help Allen and others, there is an academic debate about who is actually helped by debt cancellation.

"We should not forgive all the student debt that’s out there," said Sandy Baum, a senior fellow at the Urban Institute.

Baum's research shows that large amounts of student loan debt are typically owed by Americans with higher incomes, many of whom are capable of eventually paying off the debt.

"People who borrow a lot of money are typically people who went to college a long time and have graduate degrees, and those people have large incomes," Baum said.

Baum says Americans most in need right now are lower-income earners, many of whom don't have student debt because they didn't attend college.

Baum says targeted relief makes much more economic sense.

"How would you feel if you just finished paying off your loans and then they said, '(for) those who haven’t paid their loans, we are forgiving them,' but you get nothing?" Baum said.