Student Debt Cancellation a Welcome First Step Forward

Women Employed
4 min readAug 24, 2022


August 24, 2022

Today the Biden administration announced that they will cancel $10,000 of federal student loan debt for borrowers with income less than $125,000, and $20,000 for borrowers who had Pell Grants. They are changing income-driven repayment plans to limit payments to 5 percent of income. They also extended the student loan payment pause until December 31, 2022. These decisions will have a significant impact on millions of borrowers.

Student loan debt is the second largest category of U.S. debt and totals over $1.7 trillion. The number of Americans with student debt has increased over 50 percent in the last 15 years. Women hold two-thirds of student loan debt. A majority of student debt is held by borrowers with $0 in household wealth. Student loan debt exacerbates the racial wealth gap, with Black borrowers needing to borrow significantly more than White borrowers. One in five borrowers are in default, most of whom owe less than $6,000. Student debt creates significant economic hardship and stress. We recently polled our Women Employed staff and found less than 20 people had accumulated student loan debt totaling a staggering $1.2 million!


$10,000 in forgiveness would clear about one-third of federal student loan debt, and provide immediate economic relief for thousands of borrowers. The extension on the payment pause will enable borrowers to continue to raise their credit scores and improve their financial health, reducing economic stress and making it easier to manage their day-to-day lives.

However, a challenge with Biden’s executive order is that the debt cancellation is not automatic―anyone who wants to receive this forgiveness will need to apply for it. This could create a barrier for many people who could benefit from forgiveness. While the administration has promised to make the process as easy as possible, historically, debt-relief programs have been hard to navigate due to strict procedures and documentation requirements. Additionally, the federal student loan system has lost contact information for many borrowers, so there is no way to notify them about their eligibility. The income limit is also problematic given that debt is more influenced by wealth than current income, which does not fully capture a person’s financial situation depending on other factors.


For many borrowers, the impact of student debt is crippling. Forty percent of borrowers have not completed a degree, including many in default. Many end up owing significantly more than they initially borrowed. You can get stuck with student loan debt even if your institution defrauded you. The federal government can garnish your wages, tax refunds, and social security if you are in default, and you often can’t discharge student loans in bankruptcy. And the fastest-growing segment of borrowers are well into their 60s and 70s, paying back debt until they die.

The federal student loan system is badly in need of reform. Too often, student loan servicing is managed by unscrupulous, even predatory contractors with poor oversight. Multiple programs with good intentions to help borrowers in financial straits have been saddled by burdensome eligibility criteria, convoluted application processes, and poor recordkeeping―failing the very students they set out to protect. The Biden administration has started some much-needed reforms but there is a long way to go to make the system work for borrowers.

And, as the group that holds the most debt, women are the most impacted. Student loan debt keeps women from being able to make choices about their future: the kinds of jobs they take, if they can continue their education, whether they can manage everyday expenses, or save for a house or retirement. That’s why Women Employed joined 400+ other organizations in signing onto a statement urging the White House to cancel student debt. So while we applaud the Biden administration for this first step of cancelling $10,000 in debt, we urge the Department of Education to do more to address the student loan debt crisis. It’s a matter of educational, economic, gender, and racial equity.


If you are one of the millions struggling with student debt, visit Women Employed’s Student Loan Debt Resources page for additional tools and information available to you.



Women Employed

WE relentlessly pursue equity for women in the workforce by effecting policy change, expanding access to education, & advocating for fair, inclusive workplaces.