UnidosUS Hails President Biden’s Plan on Student Loan Payment Pause Extension and Targeted Debt Cancellation
Washington, DC – Today, UnidosUS hailed President Biden’s announcement of his three-part plan to cancel up to $20,000 in federal student loan debt for Pell Grant recipients and up to $10,000 for non-Pell Grant recipients earning $125,000 or less (or households earning less than $250,000). As a result of this announcement, 1/3 of Latinos will have their student debt cleared.
The Administration also announced that it would extend the federal student loan payment pause for a final time through December 31, 2022 and is proposing a new income-driven repayment plan that will reduce future monthly payments from 10% to no more than 5% of a borrowers’ discretionary income.
“This is a momentous development for those impacted by student debt, including millions of Latino and Latina borrowers,” said UnidosUS President and CEO Janet Murguía. “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. 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.
“The federal student loan system plays a significant role in disproportionately harming the financial futures for non-completers, women, and borrowers of color,” continued Murguía. “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. UnidosUS has long advocated for student debt relief and we look forward to working with the Biden Administration to ensure that this much needed and long overdue relief reaches everyone who needs it.”
Most Latinos in postsecondary education come from low-income households and are the first in their families to go to college. 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. According to a recent survey by UnidosUS, Oportun Financial Corporation, and BSP, a majority of Latino borrowers with a four-year degree (70%) expressed that student debt has affected their ability to save for retirement, and 69% reported that student loan debt has affected their decision to buy a house.
Twelve years after starting college, 36% of Latino borrowers owed more than they originally borrowed. And for reasons related to student loan servicing, earnings, and degree completion, Latinos face higher delinquency and default rates compared to their white peers. In our poll, 42% of respondents reported that they have defaulted on their student loans at least once and 56% of respondents reported that they have gone into forbearance at least once. The consequences of defaulting on student loans result in borrowers’ credit scores being damaged, wages being garnished, and tax refunds being seized. All critical components impacting Latino’s long-term financial security and wealth building opportunity. Given the severe impact of student debt on our community’s financial health, it is no surprise that 74% of Latino voters support student debt cancellation, according to a recent UnidosUS/Mi Familia Vota poll.