Student Debt’s Ripple Effects
September 27, 2019
By Matt Hughes
Ending the student debt crisis can unleash economic growth.
The Roosevelt Rundown is an email series featuring the Roosevelt Institute’s top stories of the week.
The Benefits of Student Debt Relief
According to a new study on student debt, “Following debt relief, distressed borrowers reduce their indebtedness by 26 percent and are 11 percent less likely to default on other accounts. After the discharge, the borrowers’ geographical mobility and probability of changing jobs increase. Ultimately, their income increases by about $3,000 over a three-year period.”
- Why this matters: “Higher ed experts tend to think about student debt in isolation. But it’s part of a larger web of burdens on borrowers,” says Roosevelt Fellow Julie Margetta Morgan. “Removing this one burden has downstream effects.” Read more from Inside Higher Ed.
Its Burden on Black Students
How It Can Curb the Racial Wealth Gap
“We believe that in order to address the Black student debt crisis, we need to eliminate racial wealth inequality. Why? Because Black-white disparities in student loan debt are deeply rooted in racial wealth disparities,” Roosevelt Senior Fellow William “Sandy” Darity and Fenaba Addo of the University of Wisconsin-Madison say in the Washington Post. “Lack of resources to pay for college costs means students need to borrow more, and issues with repayment of debts highlight persistent financial constraints upon leaving school.” Read more.
Historic Congressional Hearing
On Tuesday, the House Committee on Financial Services held its first hearing solely dedicated to the racial and gender wealth gaps in the US. Citing Roosevelt’s Rewrite the Racial Rules report and research from Roosevelt Fellows Darrick Hamilton and Sandy Darity, expert testimonies underscored the need for structural policy change. As Roosevelt Fellow Andrea Flynn tweeted, “Systemic problems require [that] systems change, not tinkering around the edges expecting families to solve the problems that were not their own making.” Watch here.
Cancelling Student Debt
“The burden of student debt on the family is new, and it’s not inevitable. By socializing the cost, we can upend the system: It’s time to enact free college and wipe out student debt,” Roosevelt Fellow Mike Konczal writes for The Nation. Read on.
What We’re Reading
- US Income Inequality at Highest Level in 50 Years, Economic Gap Growing in Heartland – NBC News
- National Health Insurance Might Be Good for Capitalism – Bloomberg
- Drugmakers, Worried About Losing Pricing Power, Are Lobbying Hard – Wall Street Journal
- The Argument Against DC Statehood Is Rooted in Racism – New Republic
- Yes, America Is Rigged. Here Is What I Learned from Reporting on Koch Industries – TIME
- US Politics Is Stuck. Can the Climate Movement Shake It Loose? – Vox