Personal Finance

Here's who would benefit most from student loan forgiveness

Key Points
  • Women, people of color and older Americans are among the groups paying the biggest price for the country's $1.7 trillion outstanding student loan balance.
  • As a result, they would be the biggest winners if President Joe Biden decides to cancel some or all of their loans.
fizkes | iStock | Getty Images

Outstanding student loan debt in the U.S. has climbed to $1.7 trillion, a balance that is not evenly distributed among college graduates.

Certain groups are far more burdened than others.

President Joe Biden is now considering whether or not to reduce or eliminate those burdens by forgiving student debt.

Here's who would benefit the most should the president move ahead.


Women would be among the biggest winners of student loan forgiveness.

That's because around two-thirds of the country's outstanding balance is carried by women.

White women student loan borrowers owe an average of $31,300, compared with $29,900 for White male borrowers.

Meanwhile, Black women borrowers owe an average of $37,600, versus $35,700 for Black male borrowers.

People of color

Black and Latino Americans have also been disproportionately burdened by student debt, and therefore stand to be greatly helped by student loan forgiveness.

Nearly 85% of Black college graduates carry student debt, compared with 69% of their White counterparts, according to the Center for Responsible Lending.

More from Personal Finance:
The Covid recovery still has a K shape
The problems with virtual evictions
How to boost your credit score

And around 38% of Black students who entered college in 2004 had defaulted on their student loans within 12 years — a rate three times higher than that of their White peers.

As a result, an aide to Sen. Elizabeth Warren, Democrat from Massachusetts, said canceling student debt would make the biggest strides toward closing the racial wealth gap since the Civil Rights movement.

Older borrowers

A growing number of Americans are bringing student loans into their golden years. And the payments pose a problem for many of them.

About 33% of student loan borrowers over the age of 65 are in default, and half of those older than 75 have fallen behind, according to a report by the Government Accountability Office.

Biden wants to forgive $10,000 in student loans. Top Democratic senators want $50,000.
Biden wants to forgive $10,000 in student loans. Top Democratic senators want $50,000.

The government can garnish a portion of a borrower's Social Security check if they're in default.

"To the extent that they rely on Social Security to pay for basic needs, it is unethical for the federal government to give with one hand and take back with the other," said higher education expert Mark Kantrowitz.

Those hit by Covid-19

Advocates say that forgiving student debt is a crucial part of any meaningful response to the coronavirus pandemic, pointing out that borrowers were already struggling prior to the crisis.

Indeed, even before more than a year of record job losses and when the country was in the midst of its longest economic expansion in history, more than 1 in 4 student loan borrowers were in delinquency or default.

Around 90% of federal student loan borrowers have accepted the government's offer to put their monthly payments on pause during the pandemic.

In a Pew survey, 6 in 10 borrowers said it would be difficult for them to resume their payments in the near future.

It's also many of the borrowers most burdened by student debt, including older Americans and women, who've suffered much of the financial fallout of the public health crisis.

"Debt cancellation would have a tremendous impact on those most impacted by the coronavirus pandemic," said Alexis Goldstein, a senior policy analyst at Americans for Financial Reform.