CLOSING THE GAP

This week’s newsletter is written by CNBC Make It work editor Hanna Howard. You can follow Morgan on Twitter @_hannahoward.

This week, President Joe Biden fulfilled one of his longtime promises: to provide student debt forgiveness to millions of Americans.

On Wednesday, the Biden administration announced that it would forgive up to $20,000 in federal student loan debt for Pell Grant recipients and up to $10,000 for non-Pell borrowers. Only individuals making less than $125,000 a year and married couples or heads of household earning less than $150,000 qualify, and the decision does not apply to private loan holders.

Even with those restrictions, the decision will affect a huge swath of the more than 40 million Americans who hold student loan debt. And with women holding nearly two-thirds of the over $1.7 trillion balance, the decision could make a sizable impact on women’s finances.

But some say it still might not be sufficient.

On average, one year after graduation, white women owe $33,851 in undergraduate loans, according to a 2021 report from the American Association of University Women . Black women owe even more: an average of $41,466. Those numbers only increase when graduate school loans are considered. 

“$10,000 is not enough to make an impact for most women, particularly Black and Hispanic women and low-income individuals,” Gloria Blackwell, AAUW CEO, said in a statement Wednesday.

Women of color, especially, have been facing a “perfect storm” of challenges to debt repayment, encompassing not only higher student loan debt totals but also racial and gender pay gaps and job volatility stemming from the Covid-19 pandemic, Blackwell noted.

“The Administration must provide permanent solutions to canceling student debt and expanding loan-repayment programs” she said. 

More information about Biden’s plan (including the application many borrowers will have to fill out to qualify for forgiveness and the Department of Education’s proposal on limiting some monthly payments going forward) will roll out over the coming days, weeks and months. And as it does, the true impact for all borrowers may start to become more clear.

Will student debt forgiveness affect you? Share your thoughts with us at askmakeit@cnbc.com 

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