/AOC slams argument that student-debt cancellation would help the rich

AOC slams argument that student-debt cancellation would help the rich

  • AOC pushed back against the argument that student-debt cancellation would benefit the rich.
  • Experts are split on whether student-debt cancellation would be regressive or progressive.
  • But many Democrats believe it would help low-income borrowers and want Biden to cancel student loans broadly.

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A core argument some make against student-debt cancellation is that it would benefit the wealthy. AOC just shut that argument down.

“I’m greatly looking forward to the Biden administration canceling student debt and no longer advancing the false narratives that student loan debt is for the privileged,” New York Rep. Ocasio-Cortez said on the House floor on Thursday. “What a ridiculous assertion. Do we really think that a billionaire’s child is taking student loans? Come on!”

 

A group of progressive Democrats, including Massachusetts Rep. Ayanna Pressley and New York Rep. Jamal Bowman, joined Ocasio-Cortez in pushing President Joe Biden to end the $1.7 trillion student debt crisis and forgive student loans for 45 million Americans. This is a cause that many Democrats have been championing for years to help eliminate the racial wealth gap, stimulate the economy, and ensure debt is not a barrier to pursuing a higher education.

But, as Ocasio-Cortez pointed out, those against broad student-debt cancellation, like the nonprofit public policy organization Committee for a Responsible Federal Budget, argue that it would be regressive and disproportionately benefit the wealthy because it would target those most likely to spend on higher education. That’s an argument even Biden has used, saying during a CNN town hall in February that he is hesitant on canceling student debt broadly because it would benefit those who went to “Harvard and Yale and Penn.”

However, Insider reported in June that cancelling $50,000 in student debt per borrower — which is Massachusetts Sen. Elizabeth Warren and Senate Majority Leader Chuck Schumer’s proposal — would actually be progressive, according to the think tank Roosevelt Institute. 

The institute found that 61% of students with incomes of $30,000 and under who began college in 2012 graduated with student debt, compared to the only 30% of students with incomes $200,00o and higher who left school with such debt.

That’s the argument progressives are going with, along with the benefits debt-cancellation would have for communities of color. Pressley said during Thursday remarks on the House floor that the disproportionate burden of student debt on Black and brown borrowers is creating “systemic barriers” to education.

“For too long, the narrative has excluded us and the unique ways in which this debt is exacerbating racial and economic inequities, compounding our gender and racial wealth gap,” Pressley said. “We have to borrow at higher rates just for a shot at the same degree as our white peers.”

She also thanked the president for extending the student-loan payment pause during the pandemic but said that in two months, when that pause lifts, borrowers are facing “a disastrous financial cliff” that can be prevented with student-debt cancellation.

“Failure to act would be unconscionable,” Pressley said. “And so we must move with urgency as we continue the work of building a just and equitable recovery from the current economic crisis. Broad based, across the board, permanent student debt cancellation must remain front and center. The people — the broad and diverse coalition that elected President Biden — demand, deserve and require nothing less.”

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