Critiques and Responses
Means testing a policy like debt cancellation will not provide forgiveness to all borrowers, but it will target the benefit to those who find themselves in the most distressing financial circumstances. Unlike universal debt cancellation proposals that use no discretion to determine who gets relief, targeting the spending to those on federal assistance programs would ensure the benefits are flowing in higher proportion to borrowers of color and low-income borrowers-groups with less generational wealth and who have been disproportionately impacted by the pandemic and economic downturn. 19 It is also the most affordable and realistic option for Congress to pursue given the significant COVID-19 economic relief packages that have already been passed. And while some may argue that this policy would direct additional federal benefits to those already receiving government assistance while others not on public assistance would get no help at all, it’s a worthwhile first step towards ameliorating the impact of student debt on a population of borrowers our higher education system has left most in the lurch, and Congress should continue working to pass longer-term affordability fixes for current students and protections for the broader universe of student debt holders. Freeing up the debt burdens of Americans on federal payday loans Virginia assistance programs could also save taxpayers money in the long run by contributing to poverty-reduction efforts that would s.
Means-testing debt cancellation may miss borrowers of color who need relief.
Means testing debt cancellation to direct it to borrowers on federal safety net programs will certainly not give relief to every borrower of color who needs it, as only 13.5% of Black Americans and 8.7% of Hispanic Americans currently participate in public assistance programs. 20 Expanding the number of programs included and reforming IDR plans to make them more generous and easier to access are two additional ways Congress could provide loan relief to borrowers of color in need. Continue reading “Means-tested relief does not do enough to help all borrowers”
