Bait and Switch: How Student Loan Debt Stifles Social Mobility (Recent Changes to Student Loan Policy and Future Recommendations)

Scott et al. / Palgrave MacMillan / November 2023

Bait and Switch Book Cover

In Biden v Nebraska (2023) the US Supreme Court struck down President Biden’s Executive Order to unilaterally cancel $442 billion of student debt as a presidential overreach of his constitutional powers. The debt cancellation plan would have eliminated student debt for 20 million borrowers and substantially reduced student debt for another 23 borrowers. In this chapter, the authors highlight how recent reforms to the Income-Driven Repayment (IDR) plan will cancel $500 billion of debt and how these reforms will fundamentally transform the student loan system. They also propose several new reforms to the student loan system that they believe will particularly help Black and first-generation student borrowers out of the student debt trap and narrow the racial wealth gap. Specifically, this chapter recommends the creation of childhood trust funds (i.e., baby bonds), banning for-profit colleges from receiving federal aid, bankruptcy reform, and requiring colleges to absorb some of the costs of student loans.