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Melissa: Welcome to The Takeaway, I'm Melissa Harris-Perry. On Wednesday, President Biden made a long awaited announcement, long awaited by more than 45 million of us who have federal student loans.

President Biden: My campaign for president, I made a commitment that would provide student debt relief. I'm honoring that commitment today. Using the authority Congress granted the Department of Education, we will forgive $10,000 in outstanding federal student loans.

Melissa: Now this student loan debt relief is aimed at middle and low income borrowers who make less than $125,000 a year. Recipients of Pell Grant, which is the financial aid program for low income students, will receive an additional $10,000 in relief. The White House estimates that this relief will allow for roughly 20 million borrowers to have their student debt fully canceled. President Biden also announced that he will be extending the pause on student loan payments one final time until December 31st. Merry Christmas y'all.

His administration will be working with the department of education on reforms intended to simplify the student loan repayment process.

In the coming months, the department of education said it will release a form to apply for this relief before the end of the year, but also noted that roughly 8 million people will receive automatic relief. Now, we also wanted to hear from you about what the President's cancellation of $10,000 in student loan debt means to you.

Andrew: This is Andrew from Milwaukee, Oregon. Forgiveness of $10,000 in student loans is a big relief. I have over $40,000 in student loan debt from grad school. I've had a very hard time finding gainful employment in my field and taking away a quarter of that debt means a lot. That's a lot of payments I won't have to make and a lot of resources I can then devote to my family and my future prosperity.

Lily: Hi, my name is Lily Cosgrove, I'm from Pasadena. Joe Biden canceling 10K of debt means that I'm going to start saving towards buying a home. I'm making a vow to invest some money and then do the adult thing. Mentally this is a big deal to have a little bit of a chip off of it.

Kim: Hello, my name is Kim Watts. I am a school teacher in Hillsborough county. $10,000 is not going to be a whole lot for me. I appreciate it but $10,000 barely pays the interest that I've accrued on my student loan debt.

Melissa: Thanks as always for sharing your perspectives and your stories with us. Now, some opponents of providing this relief say it will add to the inflation that we've been experiencing, while advocates for student loan cancellation had hoped for even more. Here to talk with me now is John King, EdTrust president and former US Secretary of Education.

Thanks for joining me John.

John: Thanks for the opportunity.

Melissa: $10,000 for these are middle income folks, 125 and lower. What difference does it make?

John: Well, for many folks, it's going to allow them to start a small business, to buy a home, to make the decision to have a child. The reality is student debt for many Americans is an albatross hanging around their necks. This will immediately, for millions of Americans, change the landscape of their lives. It's really an important step forward. Now, of course I would've liked to see more. There are certainly folks who have much more debt and they are still going to struggle. There's a disproportionate level of debt amongst African American students. This doesn't solve everything, but it is an important step forward.

Melissa: When you say you would've liked to seen more, you served as Secretary of Education, you all at EdTrust do a ton of research on this. Why would you have wanted to see more?

John: Well, the reality is we made a policy mistake as a country in early 1980s and shifted the cost of public higher education from really a public good to all about individual borrowing. We saw the Pell Grant, the federal assistance for higher education decline in purchasing power. In 1980 covered about 80% of the cost of college today, less than a third. We saw states over the last 40 years systematically disinvest in public higher education. We've got folks who are carrying 30, 40, 50, 60, 70, 80, $100,000 of debt from college.

African Americans because of the racial wealth gap in this country tied to our history of slavery, of segregation, continued racial discrimination and employment.

Unfortunately, African Americans have borne a disproportionate share of that debt burden. We've written at the Education Trust about what we call Jim Crow debt. The idea that systemic racism has contributed to disparities in the student debt crisis. For African American borrowers in particular the 10 and 20 are a good step forward, but we would've liked to see more. We would've liked to see at least $50,000 in debt cancellation.

Melissa: When you talk about these distinctions, these gaps. We know that African American borrowers still owe about 95% of their original debt. Even 20 years after enrolling in college, a report from the center for responsible lending is showing us that women carry about two thirds of the dollar burden of student loan debt. This is one I really want dig into a little bit with you here. Nearly a third of borrowers have student debt, but they actually didn't finish their degree. What's going on there? Help us to understand what it means to have the debt, but not have the degree that increases earning potential.

John: Well, then you're trapped. If you have the debt, and you don't have the degree, you often can't get back to school because of the debt. You can't earn enough in the job market to pay off the debt. That's a huge challenge. Part of what's happened over the last 40 years is we've seen the growth of the for-profit higher education sector. Unfortunately African American students are disproportionately enrolled in the for-profit sector. Many of those institutions have been predatory in their behaviors. When I was Secretary of Education, we spent a lot of energy trying to crack down on the for-profit sector.

There are some good actors, but sadly there are many bad actors. Those schools are often saddling students with a ton of debt, but then not delivering on a quality degree and not delivering on a degree that can help students actually make progress in the job market.

Melissa: It's one of those things whenever we talk about student debt or education debt, we tend to think that we're talking about, I don't know, 25 to 35 year olds or something, but this really is an issue across age categories. Something like 2.5 million Americans over the age of 62 still have student loan debt. I must admit, my own daughter is in her third year of college and I am still paying my student loans. I didn't even borrow at the worst time. I didn't even borrow at the time with the most predatory processes. Will this help older borrowers as well?

John: It certainly will. Again, I would've liked to see a higher number because many times those older borrowers are carrying significant debt and also have been helping their own kids through college and so have that debt to grapple with in their family as well. There are many folks who have 10, $20,000 of debt, and this will be life changing for them. For other folks, the changes to the income driven repayment plan that caps the amount that you have to spend on your debt based on your income, that will help them get out of the mountain of debt they're under. There's a lot here that will be helpful. Again, I'd like to see more and ultimately we need to change the system going forward.

Melissa: How do you respond to a caller like Dave?

Dave: This is Dave in Los Angeles County. I worked my way through college, paid off my debts and sacrificed and made decisions about education based on cost benefit reasoning. Forgiving $10,000 for people in poverty seems all right. Forgiving those who earn middle class incomes and have no demonstrated needs hurts by adding to the deficit and inflation. I hope the courts stop it.

Melissa: If you're Dave, shouldn't you feel a little irritated right now?

John: Well, look, what I'd say to Dave is this is an opportunity to invest in our people as a country. We made a policy mistake as a country walking away from a commitment to higher education as a public good. That has had a tremendous cost for our economy and for ultimately our democracy. This isn't an opportunity to correct that, that will be good for everyone. When folks are able to start businesses, buy homes, that's good for everyone. When folks are freed from the mental health stress that comes with a debt that they may fear they'll never pay back, that's good for everyone. That's going to create a healthier country and that's going to benefit, ultimately, Dave as well.

This is, I would say, an investment. That said, I get that there are going to be folks who look back and say, "Why'd we get this so wrong over the last 40 years?" They're right. We have to move as a country towards really seeing education as foundational to the health of our democracy.

Melissa: You said we need to make some changes going forward. What are those changes you'd like to see?

John: I'd love to get us back to a vision where we invest in higher education. We've supported efforts to establish debt free college, where the federal government would partner with states to say, "You may have to work during college, but when you graduate you're going to be able to graduate debt free from public higher ed institutions." That will require more investment. It will require things like doubling the Pell Grant so that we increase the purchasing power of the Pell Grant. It will require things like what President Biden has proposed making community college tuition free.

It will require state legislatures to put more money into their public higher ed systems to keep tuition at a reasonable level, but it is possible in the wealthiest country that's ever existed on the face of the earth to make the investment in our people. As you know, many of our international competitors already do this, they commit to investing in public higher education so that students can be confident that when they leave with that college degree, they won't be saddled with debt.

Melissa: Because I have you, I want to take one moment to ask about one other issue. The Supreme Court is going to take up the issue of affirmative action in higher education. Do you have thoughts about that, as a former Secretary of Education?

John: I'm deeply worried, given the makeup of the Supreme Court and the dominance of conservative members. I worry that we're going to see potentially the end of affirmative action in higher education. That will have dire consequences for diversity in our leadership as a country, leadership in our political sector and our business sector and our nonprofit sector. We're going to need higher education institutions, if that should happen, to step up and figure out other strategies to make sure that they maintain a diverse class. They're going to need to look at things like legacy admission preferences, where universities preference the children of alumni. That often prevents greater diversity in their class.

They're going to have to look at things like sports scholarships in sports that are accessible only to a very elite few. Sports scholarships or sports admission for students in things like squash or crew. They're going to have to look at those things and ask, "What do we need to change about our missions process to make sure we have diversity?" That's important for the health of our country. It's also important for the quality of education students receive. You want to have diverse students in the classroom.

Melissa: John King is CEO of EdTrust and former US Secretary of Education. Thank you so much for joining us today.

John: Thanks so much.

Melissa: Listeners don't go away. We are diving even deeper into the everyday reality of living with student loan debt in just a moment.

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Melissa: Welcome back to The Takeaway. I'm Melissa Harris-Perry and we've been talking about President Biden's plan to cancel $10,000 in federal student loan debt for people making 125k or less. While the White House's plans to cancel some federal student loan debt is good news to a lot of folks, it doesn't include relief for those with private student loan debt. Joining me now is Michael Arceneaux. His latest book is I Don’t Want To Die Poor. Michael, welcome back to The Takeaway.

Michael Arceneaux: Hi Melissa. Thank you for having me.

Melissa: Now, what was your concern about why you might die poor? What would be causing this potential poverty?

Michael: Private student loan debt. Your intro was perfect. My graduated with about a six figure debt. Te way that debt is structured, it doesn't really have as much of a pain as federal loans are, private are even harsher. As I write in my second book, it really controlled a lot of my life for at least 12 years. There was real reason to fear that I would die poor. I think actually the essay that you all cited, I wrote that basically people thought I was worried, basically thought suicide might be an option. I had to alleviate the concerns and say I would never do that because my mom would still be on the hook for my loans. If just to paint a picture about how bad that that is structure.

Melissa: I remember that I say so well and thinking, certainly, I know you, I love your work. All I want for anyone who's ever a guest girlfriend on the show is long life. Also the notion that the thing that stops your own hand from self-harm is the concern that your student loans might remain a burden for your mother was a really clear indication of just how much of a burden they are.

Michael: That's why I'm very happy that a lot of people wake up today. Won't have to ever think about anything close to that. At least some people anyway.

Melissa: Your reaction to President Biden's announcement was primarily joy, happiness, even if it wasn't for your own dollars and cents?

Michael: It is a very pleasant surprise that President Joe Biden of all people, whose hand in some legislation in the past actually has a lot to do with my student loan essay that you mentioned, did this to me. I was really grateful for people. I was really grateful to the organizers. I was really thankful to people like Bernie Sanders and Elizabeth Warren who made it an issue in the last democratic presidential primary, other people that have shared their debt stories. I really didn't like the attitude that some people have already taken, it was unsurprising, that, "If I suffer so should you." I really feel joy for a lot of people.

I don't think it's enough money. I think it doesn't go far enough, but it's a really big step and a testament to the fact that the country at least is changing the conversation about how we look at student loan debt and college costs.

Melissa: Now college costs and student loans debt, like so many other aspects of debt and the wealth gap, is racialized. You went to Howard University and HBCU, some might call it the HBCU. Talk to us about how Black folk, people of color, are disproportionately impacted by student loan debt.

Michael: I have a bit of a plague brain, but I'm not mistaken, Black college graduates on average have about 52,000 in college debt. Latinos have around 32. White college graduate students taking around 12 or something, significantly less than Black and brown. I will say I don't love that. Some of the Biden administration requires this are means tested because I don't think that 125k for Black earners is the same for white, but that said, most people in this country don't earn anything close to that. I'm really genuinely happy that this is going to help a lot of Black people.

I do worry about Black people like me with private loans, how they'll deal with this, but I don't want to taint the moment. I do think this is a nice step and we need all the help we can get, particularly Black people. I look at a lot of conversations on Twitter, across social media, that I find not realistic about our financial state. I think a lot of people who have been quietly suffering will not suffer anymore and that really does bring me happiness. It's not easy to find happiness, particularly with the government, in these times. I'm just going to take it.

Melissa: Also, to bring back the essay, one of the things you talk about is being recruited to college. You grew up in Houston, you were recruited to a private university, to Howard with a lot of hopes and dreams about, "Go for it, do your best." I certainly had that conversation with folks. Even as you graduated, Oprah Winfrey was your commencement speaker. It was like, "Yes there's some debt, but that's all right. Here we are, go do your best." If you were recruiting, if you were giving a commencement, are there any kinds of different pieces of advice that you might give to students or to institutions about how to think about the cost benefit analysis?

Michael: I will say, as I write a little bit more in the book, that I didn't necessarily go in there into the situation completely blind. I didn't know all of the things, I didn't know a lot about the financial tricks, but I guess what I would say to a lot of college graduates, and unfortunately Gen Z is learning this, that I graduated during a year when my industry as I understood imploded. There was a great recession, and then there has been since more financial times, hard times. You can't really prepare for basically America anymore the way it used to. My advice?That's a good question.

I would just say, I hope colleges are doing more about handling the actual cost of tuition, particularly HBCUs. I hope the government because the Biden administration, this is fulfilling one pledge. He also pledged to actually look after a lot of college graduates of private HBCUs. I hope that they do that. That said, colleges know that tuition is rising, it almost feels how can I put this? I'm sorry if I'm rambling, but the way that President Biden suggested like I guess ITT and other schools about promising jobs and all this money if you go to their schools, and then you feel scammed. I think the same can arguably be said about most public college institutions. I think that's a conversation we need to have.

As far as advice for other people, I'm just like, do the best that you can with circumstances that are out of your reach.

Melissa: Michael Arceneaux is the author of two books. The latest is I Don’t Want To Die Poor. You can also follow him on social media @youngcynic. Michael, as always, thanks for being with us.

Michael: Thank you for having me.

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