Cancel Student Debt

The Student Debt Crisis: A Generation Trapped

Forty-three million Americans collectively owe $1.6 trillion in federal student loan debt, a burden that crushes economic mobility, delays homeownership, prevents family formation, and traps borrowers in decades of financial precarity.¹ The average borrower owes approximately $37,000, but many owe far more—particularly graduate students and those who attended for-profit colleges that delivered worthless credentials while extracting maximum tuition.¹ This debt crisis did not emerge by accident. It resulted from deliberate policy choices: decades of state disinvestment in public higher education, federal failure to regulate predatory lending and for-profit colleges, and a political consensus that treated education as a private investment rather than a public good.

The economic consequences extend far beyond individual borrowers. Student debt suppresses consumer spending, reducing economic growth. It prevents young workers from starting businesses, buying homes, or investing in their communities. It forces people to delay having children or forgo parenthood entirely due to financial insecurity. For millions of Americans, student debt represents a permanent sentence of economic precarity imposed in exchange for accessing the education our economy demands as a prerequisite for middle-class employment.

Federal Student Debt Cancellation: Presidential Authority and Congressional Action

The President of the United States possesses clear legal authority to cancel federal student debt through the Higher Education Act of 1965, which grants the Secretary of Education broad power to “enforce, pay, compromise, waive, or release any right, title, claim, lien, or demand” related to federal student loans.² This authority has been used repeatedly by previous administrations to cancel debt for specific categories of borrowers, including those defrauded by for-profit colleges, those with total and permanent disabilities, and public service workers.² The same statutory authority permits the Secretary to cancel debt broadly for all federal student loan borrowers.

President Biden attempted to use this authority in August 2022, announcing a plan to cancel up to $10,000 in federal student debt for borrowers earning less than $125,000 annually, and up to $20,000 for Pell Grant recipients.³ This plan would have provided relief to approximately 43 million borrowers, completely eliminating debt for roughly 20 million Americans.³ However, Republican state attorneys general and conservative activist organizations sued to block the plan, and the Supreme Court’s conservative majority struck it down in June 2023 in Biden v. Nebraska, ruling 6-3 that the administration lacked authority under the HEROES Act of 2003.⁴

Following the Supreme Court decision, the Biden administration pursued alternative pathways for debt relief. In April 2024, the administration announced new debt cancellation plans that would benefit over 30 million borrowers through regulatory changes to income-driven repayment plans, relief for borrowers experiencing financial hardship, and cancellation for those who have been in repayment for decades.⁵ Republican officials immediately filed lawsuits to block these plans as well, obtaining preliminary injunctions that have prevented implementation.⁵

Congress retains clear authority to cancel student debt through legislation, entirely circumventing questions about executive authority. Senator Bernie Sanders and Representative Ilhan Omar introduced the College for All Act, which would cancel all $1.6 trillion in federal student loan debt and make public colleges and universities tuition-free.⁶ This legislation would be financed through a modest tax on Wall Street speculation—a 0.5% tax on stock trades, 0.1% on bond trades, and 0.005% on derivatives trades.⁶ The financial transaction tax would raise an estimated $220 billion annually while curbing destabilizing high-frequency trading that serves no productive economic purpose.⁶

The College for All Act represents comprehensive reform addressing both existing debt and the system that generates it. Simply canceling current debt without reforming higher education financing would allow the crisis to rebuild as future students take on new loans. Making public colleges tuition-free prevents the debt trap from ensnaring future generations, while canceling existing debt provides immediate relief to current borrowers. This combined approach breaks the cycle rather than merely pausing it.

Massachusetts Student Debt Burden

Massachusetts residents carry significant student debt burdens despite the Commonwealth’s relatively high incomes and concentration of higher education institutions. Approximately 840,000 Massachusetts residents owe federal student loans, with an average balance of $33,800.⁷ Massachusetts ranks 17th nationally in average student debt per borrower, reflecting both high college costs and high enrollment rates in the Commonwealth’s extensive higher education system.⁷

The concentration of expensive private colleges and universities in Massachusetts contributes to high debt burdens. While the University of Massachusetts system provides relatively affordable public higher education, many Massachusetts students attend private institutions with tuition exceeding $50,000 annually. Graduate students at Massachusetts medical schools, law schools, and business schools frequently accumulate six-figure debt, particularly those attending private institutions like Boston University, Northeastern, or Boston College.

Massachusetts has one of the highest concentrations of for-profit college enrollment in the nation, with institutions like Kaplan University, Capella University, and Southern New Hampshire University enrolling thousands of Massachusetts residents.⁸ These for-profit colleges disproportionately target low-income students, students of color, and first-generation college students, delivering inferior education outcomes while maximizing federal student loan revenue.⁸

The economic impact of student debt in Massachusetts is substantial. High debt burdens delay homeownership in a state already facing severe housing affordability challenges. Student debt suppresses entrepreneurship in a state that depends on innovation and startup activity. The debt burden disproportionately affects Massachusetts communities of color, perpetuating racial wealth gaps in one of the nation’s most unequal states by race.⁹

The Economic Case for Student Debt Cancellation

Critics of student debt cancellation claim it would be fiscally irresponsible or constitute a giveaway to the privileged. These arguments collapse under scrutiny. Student debt cancellation would stimulate economic growth, reduce racial wealth inequality, and cost taxpayers far less than corporate subsidies and tax cuts routinely approved by Congress.

Canceling $1.6 trillion in student debt would boost GDP by $86 billion to $108 billion per year, creating up to 1.5 million jobs annually over the first decade.¹⁰ Freed from monthly loan payments averaging $400, borrowers would increase consumer spending, start businesses, buy homes, and invest in their communities. The economic multiplier effect of debt cancellation would generate far more economic activity than the same dollars spent on high-income tax cuts, which recipients largely save rather than spend.

Student debt cancellation would substantially reduce racial wealth inequality. Because Black borrowers carry disproportionate debt burdens and face worse repayment outcomes due to labor market discrimination and generational wealth gaps, cancellation provides greater relative relief to Black families than white families. One analysis found that canceling all student debt would reduce the Black-white wealth gap by approximately 15%.¹¹ No other single policy intervention offers comparable impact on racial wealth inequality.

The fiscal cost of student debt cancellation must be understood in context. The federal government has already disbursed these loans; cancellation affects future revenue collection, not immediate budget outlays. Moreover, much of this debt would never be repaid under current law. Income-driven repayment plans already provide for forgiveness after 20 or 25 years, meaning the government expects to eventually forgive hundreds of billions in student debt. Canceling it now rather than decades from now accelerates relief while providing immediate economic stimulus.

Congress routinely approves far larger expenditures for far less worthy purposes. The 2017 Tax Cuts and Jobs Act cost $1.9 trillion over ten years, primarily benefiting wealthy individuals and corporations.¹² Annual military spending exceeds $800 billion, much of it wasted on weapons systems the Pentagon doesn’t want and wars that undermine national security. Bank bailouts during the 2008 financial crisis exceeded $700 billion to rescue institutions whose reckless behavior caused economic collapse. If the federal government can find trillions for tax cuts for the rich and bailouts for Wall Street, it can certainly afford to cancel student debt for working families.

Rejecting Means Testing and Partial Measures

Some moderate Democrats propose means-tested student debt cancellation, limiting relief to borrowers below certain income thresholds. President Biden’s cancelled plan would have imposed a $125,000 income cap, excluding higher earners from relief.³ While politically motivated by concerns about canceling debt for wealthy borrowers, means testing creates serious problems.

First, means testing adds administrative complexity, delaying relief and excluding eligible borrowers due to documentation barriers. The simplest, fastest, and most effective approach is universal cancellation for all federal student loan borrowers. Second, income-based means testing ignores wealth inequality. A recent law school graduate earning $100,000 while owing $200,000 in debt has far less financial security than someone earning $75,000 with no debt and significant family wealth. Income does not capture true economic precarity or need.

Third, means testing weakens political coalition building. Universal programs like Social Security and Medicare command broad public support because everyone benefits, creating large constituencies defending them against cuts. Means-tested programs generate resentment among excluded groups and prove easier to attack politically. If we want durable student debt policy that cannot be easily reversed, universal cancellation builds stronger coalitions than means-tested alternatives.

Finally, concerns about wealthy borrowers receiving cancellation are vastly overblown. The vast majority of student debt is held by low- and middle-income borrowers. Approximately 60% of student debt is held by households earning less than $74,000 annually.¹³ Graduate students in medicine and law may have high debt but face good earning potential; however, many graduate degrees—social work, education, public policy, divinity—carry high debt burdens without corresponding high salaries. These borrowers deserve relief regardless of whether they technically exceed arbitrary income thresholds.

Massachusetts Congressional Leadership on Student Debt

Massachusetts congressional representatives have an opportunity to lead on student debt cancellation. Senator Elizabeth Warren has been a vocal advocate for cancellation, proposing canceling up to $50,000 for all borrowers and introducing legislation to address the underlying causes of student debt.¹⁴ Senator Ed Markey has also supported broad debt cancellation. Representative Ayanna Pressley has championed cancellation as a racial justice issue, highlighting how debt disproportionately burdens Black borrowers.¹⁵

However, Massachusetts congressional representatives must go beyond rhetoric to action. They should:

Cosponsor the College for All Act: Senator Sanders and Representative Omar’s legislation provides the comprehensive framework necessary to cancel existing debt and prevent future debt accumulation. Massachusetts representatives should sign on as cosponsors and actively champion the bill.

Pressure President Biden for Executive Action: Despite Supreme Court obstacles, the President retains authority under the Higher Education Act to cancel debt. Massachusetts representatives should publicly pressure the administration to use this authority maximally, canceling as much debt as possible through executive action while pursuing legislative solutions.

Block Republican Efforts to Restrict Cancellation: Republican legislators have introduced bills to restrict presidential authority to cancel student debt and block regulatory changes providing relief. Massachusetts representatives must vigorously oppose these efforts, defending borrowers against Republican attacks.

Support Massachusetts Borrowers Harmed by For-Profit Colleges: Massachusetts had significant enrollment in predatory for-profit institutions like Corinthian Colleges. Representatives should ensure that borrower defense discharges are processed efficiently and that eligible Massachusetts residents receive the relief they deserve.

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