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Finally ready to jump into the student loan debt cancellation discussion with some thoughts! Much ink has already been spilled so not sure I have dramatically new insights to add, but will give my take. 1/
I’m quoted recently calling student loan cancellation a “no brainer.” I actually didn’t intend to refer to a specific proposal there, just that some level of cancellation is a no-brainer in the current context given the alignment of motivations 2/
These motivations extend beyond just addressing the student loan repayment crisis, to also include racial justice, stimulus, and political considerations. If it were up to me, I’d advocate for cancellation of student debt up to somewhere between $10-20K per borrower. 3/
This would provide immediate relief to those borrowers facing the greatest risks of default. This is the most urgent motivation in my opinion. Even before the pandemic, more than 1 in 4 borrowers were defaulting, concentrated among those w/ lowest balances 4/
And nearly HALF of Black student loan borrowers were experiencing defaults w/in 12 years of starting college, prior to the pandemic. Every time I look at my own freaking work on this I am like “Really?” Is it possibly THAT BAD? Yes, it is: https://twitter.com/jscottclayton/status/951428573843386369
Defaults are not a rare occurrence! And there are good reasons to worry they will skyrocket in current conditions. So we can’t be analyzing the stimulus effects of loan cancellation as if the counterfactual is years of guaranteed, continuous loan repayments. 6/
At the end of December, the current student loan payment pause will end. When borrowers take time away from regular payments, and lose contact with servicers, it can increase the risk of delinquency & default when payments are due again 7/
I’m VERY worried about millions of borrowers trying to get back into repayment at the same time. Forgiving borrowers with the smallest debts would clear out a lot of completely unnecessary pain and paperwork, and free up capacity to assist borrowers with bigger debts. 8/
Yes, we have income-driven repayment plans that are supposed to address persistent economic hardship. And they do! And people should enroll in them! But, they are complex to navigate and students don’t always get the help they need to get and stay enrolled. 9/
Low income borrowers in particular have been underserved by the IDR plans. We are putting these borrowers under so much strain and pain and hassle for a few thousand bucks that might be forgiven down the road anyway 10/
Some have argued if we want to do stimulus and help struggling people, why focus on student loans? Surely there are people worse off. Why not forgive $10K in medical debt, or send another stimulus check. I *really* hope these convos are not either/or! But -
Here’s a additional principal to which I think federal student aid policy should aspire: DO NO HARM. Sadly, student loans – particularly when combined with lax regulation of for-profit institutions, and deficient loan servicing, actually HAVE caused harm. 12/
The federal government encouraged students to take these loans, even at institutions with atrocious graduation and repayment rates, and without providing sufficient protection against default risk. And yet so many borrowers who default think *they* are the failure 
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Federal policy caused harm. Federal policy has the ability to rectify that harm. Federal policy should do so. I see this as a trust and moral accountability issue, distinct from other motivations for student debt relief. 14/
And of course the harms are not evenly distributed. Yes, many students get big benefits from fed loans. This is why I wouldn’t wipe out all $1.7 trillion of student debt. But students who benefit are disproportionately White. Those who default are disproportionately Black. 15/
Finally, student loan forgiveness in the range of $10-20K also has the advantage of policy coherence. It aligns backwards-looking loan relief (benefitting yesterday’s students) with forward-looking proposals to reduce debt for today’s and tomorrow’s students 16/
Wiping out all student debt would create policy incoherence. I don’t see plans to make grad school free going forward, for example. But Biden has proposed doubling the max Pell, which would provide an extra $12,000+ for low income students in their first two years of school. 17/
For borrowers whose debts would be fully forgiven, I would avoid tangling the forgiveness up with other requirements like public service or anything requiring borrowers to request/justify. To get the impact, it needs to be automatic. 18/
For borrowers that would still have debt remaining above the cancellation amount, I like the idea of tying cancellation to enrollment in an income-driven repayment plan, which has been shown to reduce the risk of default. 19/
I'm pretty sure anything I've ever said on this, @dynarski has said better. She's always 20/20. ;) https://twitter.com/dynarski/status/1328437979614998534
