President Biden announced earlier this week his plan to forgive approximately $300 billion of student debt, critics of the bill have said the measure will increase inflation, present moral hazards, and that Biden has no legal authority to do so. Supporters have said the decision is fair and will be a boon to the economy. The debate has also come to the Latino community, as many decide if Biden’s Student debt forgiveness and Hispanics are friends or foes.
The program announced by Biden would give up to $10,000 for non-Pell recipient students and up to $20,000 for students who did get a Pell award. To qualify, students must earn less than $125,000, which is more than two times the median income for Hispanics in 2020. The financing of this massive program will most likely come from either issuing more government debt or taxes.
To understand how this program effectively benefits Latinos, we need to consider two things: how would the student debt forgiveness affect Hispanic students and how many Hispanics actually go to college right now?
President Biden announced his program to forgive student debt this week (EFE)
Student debt forgiveness and Hispanics, what the data shows
Democrats have argued that debt forgiveness would greatly help Hispanics as it would wipe out half of their debt. However, how much of this claim is accurate, and is it missing any important context?
In order to really understand if debt forgiveness helps Latinos, we need to know how many Hispanics actually get indebted to get into college. According to data by Excelencia in education —the source used to argue the program benefits half of Latinos student—, 49% of Latino undergrads do not get any student loans, 23% get under $10,000 in debt, 26% get between $10,000-$50,000, and only 2% got over $50,000, other figures show more Hispanics (67%) have educational debt and 43% of them less than $10,000 of it. But since the Excelencia data is the one being used to back this claim, we would mostly stick to these numbers.
Since Biden’s plan would wipe out student debts under $10,000 then it is true that the program would decrease almost half of the Hispanic student debt. However, that figure leaves out the Excelencia in Education data showing that almost half of Latinos don’t get indebted in the first place, meaning that the measure will really benefit a quarter of Hispanic students. If we use the data showing more Latinos indebted, the total amount without debt would increase to approximately a third of Hispanic students.
Only 36% if Hispanics between 18-24 years attend college (EFE)
However, not all Hispanics between 18-24 years go to college, in fact, quite the opposite. According to data from the NCES, only 36% of Hispanics pursued a postsecondary education in 2018. The latest US Census data shows that there are 23,178,113 Hispanics between 19 and 24 years old in 2019, which means that 8.3 million are in higher education. If we use the Excelencia data, then 1.9 million would be the ones who mostly benefit from Biden’s plan, seeing their debt almost entirely wiped out.
This number would be approximately 8.2% of the 18–24-year Hispanic population, and less than 1% of the entire Hispanic population in America.
What critics and supporters say
That is what the raw data says, but what do Hispanic supporters and opponents argue? On April 26, 2022, Rep. Raul Ruiz (D-CA), chairman of the Hispanic Congressional Caucus, sent a letter to Biden arguing in favor of the debt forgiveness saying that the measure would bring great relief to Hispanic communities across the country. Other supporters have argued that the debt stifles Latinos from starting businesses, and developing financially after they have graduated from college, or that increases the barriers to entry for Latino to go into college.
Critics of the measure have not been as optimistic about it. In remarks to El American, the president of the Libre Initiative Daniel Garza said that while for many Hispanics getting an undergraduate degree is a “dream come true,” many Latinos have been able to “start a business, perfect their trade and launch a career all without a university degree.”
Garza furthered his points saying that “the government should not be in the business of transferring the financial burden of student loans to taxpayers and do nothing to address the root issue of escalating college tuition costs. Instead of subsidizing student loans with taxpayer dollars, policymakers should systemically alter how students finance their postsecondary education.”
In response to those who argue that the measure will reduce half of the Latino student debt, Garza remarked that the decision “creates a moral hazard. These same folks —and many others now— will feel they can take on new loans and advocate for future forgiveness. It is also been woefully unfair to those who struggled to pay off their loans and see no merit in doing it again.”
Garza concluded his criticisms by saying that Biden’s student debt forgiveness “has undermined the trust we have in financial obligations, and the promises of people to make good on them.”
Daniel is a Political Science and Economics student from the University of South Florida. He worked as a congressional intern to Rep. Gus Bilirakis (FL-12) from January to May 2020. He also is the head of international analysis at Politiks // Daniel es un estudiante de Cs Políticas y Economía en la Universidad del Sur de la Florida. Trabajo como pasante legislativo para el Representate Gus Bilirakis (FL-12) desde enero hasta mayo del 2020. Daniel también es el jefe de análisis internacional de Politiks.