Personal finance

Here are the people who will lose out most if student loan forgiveness falls through

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If the Supreme Court decides to strike down President Joe Biden’s student loan forgiveness plan, it will be a bigger loss for some groups than others.

That’s because the $1.7 trillion education debt crisis has hit certain populations especially hard.

Since Biden unveiled his plan to cancel up to $20,000 in student debt for tens of millions of Americans, Republicans and conservative groups have filed at least six lawsuits to try to halt the policy, arguing that it’s an overreach of executive authority and unfair in a number of ways.

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The Supreme Court has agreed to make the final ruling on the president’s plan, and it will hear arguments on the case beginning in February.

If the policy doesn’t survive the court and the debt isn’t canceled, here’s who will most miss out.

Low- and middle-income individuals

According to an analysis by the White House, 87% of the dollars forgiven under its plan would go to those making less than $75,000 a year.

Meanwhile, any individuals earning more than $125,000 would be excluded from the relief all together.

Those who stand to get the most debt cancellation under the president’s plan — $20,0000 — received a Pell Grant in college, meaning they also came from low-income families. Most recipients are from households with incomes of less than $60,000, says higher education expert Mark Kantrowitz.

“This plan really helps low-income people across the board,” Andre Perry, a senior fellow at Brookings Metro, said in a recent interview on The Current, a Brookings Institution podcast.

People of color

The student debt crisis is cited as a main factor for the wide racial wealth gap in the U.S. today. As of the second quarter of 2022, Black families have 25 cents for every dollar of white family wealth, according to the Federal Reserve Bank of St. Louis.

Black college graduates owe an average $7,400 more than their white peers, a Brookings Institution report found. And that inequity only gets worse with time: Black college students owe more than $52,000 four years after graduation, compared with around $28,000 for the average white graduate.

Wisdom Cole, the national director of the youth and college division at the NAACP, recently told Politico that if student loan forgiveness doesn’t come to fruition, it “would be an atrocity for borrowers all across the nation and impact Black borrowers at a higher level.”


Women were widely recognized as the biggest winner of Biden’s student loan forgiveness plan, since they owe two-thirds of the country’s outstanding student debt.

Research from the Education Data Initiative found that women student borrowers have an average debt almost 10% higher than their male peers one year after graduation, and that, because of the persistence of the gender pay gap, women take two years longer than men to pay off their student loans, on average.

“Women will be the most affected if loan forgiveness fails,” Kantrowitz said.

Older Americans

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In recent years, due to the fact that more people are returning to school later in life and that student debt has become more burdensome and therefore harder to pay off, more people continue to have the loans into their 50s, 60s and beyond.

In 1989, just 3% of families headed by someone 50 and over carried student loan debt, and their average balance was around $10,000, according to AARP. By 2016, nearly 10% of these older households still owed on student loans, and their typical balance ballooned to more than $33,000.

As a result, the problem of student debt for older Americans is likely to only worsen without the cancellation, experts say.

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