Debt cancellation by the federal government would put borrowers on a path to sustainable wealth creation and help to jumpstart an economic recovery
Contact: Jon Purves
Associate Director, Media Relations
The Aspen Institute
Washington, DC, February 16, 2022– The Aspen Institute Financial Security Program, has outlined a call to action for policymakers on canceling at least $30,000 for all federal student loan borrowers, putting them on a more sustainable path to financial security.
Katherine Lucas McKay, co-author of an article currently posted to the Aspen Institute’s website, and Associate Director at the Aspen Institute Financial Security Program, says “Canceling $30,000 per borrower at a minimum is the right amount to relieve financial pressure and jumpstart much-needed wealth building for millions of households.”
The pandemic student loan payment pause resulted in nearly all of the 43 million federal student loan borrowers choosing to stop payments, saving borrowers billions of dollars with no negative impact on the economy. Borrowers used the suspension of loan payments to instead pay down debt, increase savings, and put money towards down payments on homes. Student loan cancellation would enable these temporary wealth building behaviors to become permanent, supporting the idea that there would be significant benefits for people and families across America if policymakers act on student loan cancellation before payments are set to resume in May 2022.
The analysis supports a broad-based student loan cancellation policy that prioritizes three financial security goals:
- Meaningfully assist borrowers with the greatest need
- Significantly reduce racial wealth gaps
- Set the economic recovery on the path towards the right goal: wealth-building for all
Building on an analysis of the Federal Reserve’s 2019 Survey of Consumer Finances published today by the Aspen Institute Financial Security Program that identifies student loan debt as a primary driver of the racial wealth gap, the authors affirm that student loan debt cancellation of at least $30,000 is the right amount that will provide relief for borrowers most in need. For these borrowers, cancellation is key to reducing barriers to sustainable wealth creation, and now is the time to act.
Katherine Lucas McKay is an Associate Director at the Aspen Institute Financial Security Program (FSP). She leads Aspen FSP’s research on topics including housing, consumer debt and student loans, inclusive saving strategies, and household wealth. Her work has been featured in the New York Times, Washington Post, Vox, and more. Tim Shaw is the Associate Director of Policy at FSP and leads policy analysis and outreach on economic mobility, emergency and retirement savings, and inclusive financial systems; his work has been featured in numerous publications including The Washington Post, Politico, and The Wall Street Journal.
Those interested in the topic of student loan debt cancellation policy are encouraged to visit https://www.aspeninstitute.org/blog-posts/the-federal-government-should-cancel-at-least-30000-of-your-student-loans-heres-why/. Members of the media interested in interviewing the authors should contact Jon Purves firstname.lastname@example.org .
The Aspen Institute Financial Security Program’s (Aspen FSP) mission is to illuminate and solve the most critical financial challenges facing American households and to make financial security for all a top national priority. We aim for nothing less than a more inclusive economy with reduced wealth inequality and shared prosperity. We believe that transformational change requires innovation, trust, leadership, and entrepreneurial thinking. Aspen FSP galvanizes a diverse set of leaders across the public, private, and nonprofit sectors to solve the most critical financial challenges. We do this through deep, deliberate private and public dialogues and by elevating evidence-based research and solutions that will strengthen the financial health and security of financially vulnerable Americans. For more information, visit https://www.aspeninstitute.org/programs/financial-security-program/
The Aspen Institute is a global nonprofit organization committed to realizing a free, just, and equitable society. Founded in 1949, the Institute drives change through dialogue, leadership, and action to help solve the most important challenges facing the United States and the world. Headquartered in Washington, DC, the Institute has a campus in Aspen, Colorado, and an international network of partners. For more information, visit www.aspeninstitute.org.