Canceling student debt will be essential to reviving the Massachusetts economy as the state deals with the financial impact of the COVID-19 pandemic.
Student debt already pulls more than $2.5 billion annually out of the Commonwealth’s economy, according to a University of Massachusetts Amherst researcher who has just updated her work to show how the spike in unemployment resulting from the coronavirus crisis will exacerbate the problem.
A coalition of education, labor, social justice and community activists is currently calling for canceling a substantial amount of student debt and will be addressing the issue during a Facebook Live event on Wednesday evening.
“Students at public colleges and universities are amassing nearly as much debt as those attending private colleges. We are facing the risk of losing public higher education as a public good.”MTA President Merrie Najimy
There is currently a six-month moratorium on federal student loan repayments. The MTA and the Fund Our Future coalition are pushing for broader debt cancellation and for debt-free public higher education. The new HEROES Act impressively includes $10,000 in student debt cancellation, from both federal and private lenders. But that still leaves Massachusetts public higher education students carrying, on average, an excessive amount of debt.
“Students at public colleges and universities are amassing nearly as much debt as those attending private colleges. We are facing the risk of losing public higher education as a public good.” said Merrie Najimy, president of the Massachusetts Teachers Association, which is a key member of the coalition. “This has to stop — and it must stop now. Our public higher education system must be accessible to everyone, including the many thousands of workers who will be making career transitions during the upcoming period of economic rebuilding.”
The downturn resulting from the COVID-19 crisis will amplify the negative impact that student debt has on the state economy, according to “COVID-19 Pandemic, Economic Recovery and the Need for Student Debt Cancellation in Massachusetts,” an updated study examining the broader societal benefits of canceling higher education debt.
Education, labor, social justice and community activists who are calling for a cancellation of student debt will address the issue during Wednesday’s Facebook Live event, which will begin at 7 p.m. and will be streamed on the Massachusetts Teachers Association’s Facebook page.
Study author Anastasia C. Wilson, a Ph.D. candidate at UMass Amherst, pointed out in her first report, “The Causes and Consequences of Mounting Student Debt in Massachusetts,” that the state forgoes $2.5 billion in savings, equity and economic activity due to the burden of debt held by the Commonwealth’s college graduates. The sharp spike in unemployment caused by COVID-19 will increase that drag on the economy, according to Wilson’s research.
The research points to the potential growth in GDP when student debt is canceled.
Other key findings in the study include:
- Loan cancellation improves workers’ earning and mobility.
- Student debt exacerbates inequalities along race, ethnicity and gender lines, and cancelling debt will help close wealth gaps.
- Canceling student debt would redirect income toward economic activity with better multiplier effects in our communities.
Wilson will be joining representatives of the Public Higher Education Network of Massachusetts, the MTA and other members of the Fund Our Future coalition for the Facebook Live event. The coalition is urging Congress to pass legislation canceling up to $30,000 in student debt for individuals. In Massachusetts, where student debt has ballooned continuously since 2004, the average debt for a borrower with federal student loans is $33,000.