- New data from Sen. Elizabeth Warren's office highlighted the impact of student debt relief.
- It found $10,000 in relief would zero out balances for 32% of borrowers, while $50,000 would wipe out debt for 76%.
- Additionally, $10,000 in relief — which Biden pledged to fulfill — would wipe out balances for 2 million Black borrowers.
Any bit of student-loan relief will help borrowers — but new data found the more forgiveness, the better.
On Tuesday, an analysis prepared for Massachusetts Sen. Elizabeth Warren and obtained by Insider found that if President Joe Biden fulfills his campaign pledge to cancel $10,000 in student debt for every federal borrower, 32%, or 13 million, borrowers will see their debt balances turn to zero.
And with every $10,000 increment, the share of borrowers impacted will only increase — $30,000 in relief would zero out balances for 24 million borrowers, and $50,000 in relief — an amount Warren and many of her Democratic colleagues have pushed for — will wipe out total debt balances for 76% of borrowers, or 30 million total.
"Our findings bolster prior research showing that debt cancelation would free millions of borrowers from financial burdens, help close debt and wealth gaps between Black and white households, and eliminate runaway student loan balances for distressed borrowers," the analysis, prepared in part by Dr. Charlie Eaton at the University of California, Merced, wrote. "Higher levels of cancelation do more towards each of these ends. In sum, every dollar of student debt cancelation counts, but bigger is better for advancing racial equity and economic security."
The analysis also revealed how influential broad student-loan relief would be for minority borrowers. $10,000 in debt forgiveness would wipe out balances for 2 million Black borrowers, and $50,000 in relief would reduce the share of Black individuals with student debt from 24% to 6%, narrowing the Black-white gap.
Warren has long been a proponent for broad student-loan forgiveness, not only because she said it will stimulate the economy but also due to the impact it would have on closing the racial wealth gap in the country. This new data comes as Biden is inching closer toward making a decision on debt relief — he told reporters last week that while he is not considering $50,000 in forgiveness, a decision on canceling student debt will be made "in the next couple of weeks."
The racial impact of student debt has also been a focus for other prominent lawmakers, like Senate Majority Leader Chuck Schumer. In a recent opinion piece with NAACP President Derrick Johnson, Schumer detailed how Black borrowers are more likely to take out student loans to begin with than their white counterparts, and while the median white borrower will owe just 6% of their student debt 20 years after entering college, the median Black borrower will still owe 95% of their debt over the same time period.
"This disparity is unacceptable," Schumer and Johnson wrote. "It is un-American. And at the current rate, it is entirely unsustainable."
It's unclear how exactly Biden plans to act on student debt, but reports have noted he is considering at least $10,000 in forgiveness that could likely be subject to income limits. Still, as the analysis noted, "every dollar of immediate debt cancelation counts, but bigger is better for racial equity and tackling wealth inequality."