Kamala Harris’ Student Debt Forgiveness Plan Is Part of a Broader Proposal to Help Black Entrepreneurs
Over the weekend, California senator and Democratic presidential candidate Kamala Harris announced a policy proposal aimed at closing the opportunity gap. One part of this proposal, a plan a give student debt loan forgiveness to people who meet certain requirements, has drawn intense criticism from people who see those requirements as overly restrictive.
According to her plan, Harris intends to give student loan debt forgiveness to Pell grant recipients who successfully open businesses in underserved communities and operate those businesses for three years. People turned to Twitter and various news outlets to ridicule the plan, arguing that it would only help a minuscule number of students and proposing their own satirical debt forgiveness requirements.
The plan is part of a proposal to close the opportunity gap specifically for black Americans. Here’s a closer look at Harris’ student debt forgiveness plan within the context of her wider proposal and the broad Democratic field.
How Harris’ Debt Forgiveness Plan Could Help Black Americans and Entrepreneurs
Harris’ plan may have the potential to help more people than the dozen or so her critics contend it will. Pell grants (a type of federal student aid for undergraduates that are given out solely on financial need and do not need to be paid back) are the largest source of federally funded grants: Seven million Pell grants were distributed during the 2017 to 2018 school year. The maximum Pell grant award for the 2018 to 2019 school year was $6,095; recipients of Pell grants can also receive federal student loans that need to be repaid. According to data from the 2015 to 2016 school year, 72 percent of black students received Pell grants, compared to only 34 percent of white students.
In addition, according to data from the Small Business Administration, about half of small businesses survive five years or longer. Even if just a small fraction of Pell grant recipients go on to pursue entrepreneurship, these statistics indicate that Harris’ plan could have the potential to help thousands of economically vulnerable entrepreneurs get student loan debt forgiveness.
The Wider Scope of the Plan
Debt forgiveness is just one item on a laundry list of policies within Harris’ broader plan.
She cites statistics that show how black Americans are disproportionately burdened by student loans (roughly 40 percent of black Americans between 25 and 55 years old have student debt, as opposed to around 30 percent of whites and Latinos) and difficulties getting the loans they need to succeed as entrepreneurs. Through her plan, she hopes to invest $60 billion in funding for STEM education at historically black colleges and universities (HBCUs) and other minority serving institutions (MSIs) and expand opportunities and support for black entrepreneurs.
Harris wants to work with Congress to create a $12 billion capital grant and technical support program to distribute funds to help minority small business owners launch their ventures. She intends to allow participants in the debt forgiveness program to defer their student loan payments interest-free for up to three years while they build their business, and have up to $20,000 in federal student loans forgiven.
She also wants to streamline the federal contracting process for minority-owned small businesses, particularly in communities facing persistent poverty. She hopes to bring back the State Small Business Credit Initiative to support state programs to strengthen small businesses and provide incentives for the funding to support minority-owned businesses in high-poverty communities. She wants to reform the Opportunity Zones program that gives tax benefits to those who invest in businesses in economically-distressed communities.
In addition, she intends to reinstate tools at the Consumer Financial Protection Bureau designed to identify and prosecute acts of discrimination against minority entrepreneurs. And finally, she wants to expand entrepreneurship centers at HBCUs.
Is Harris Dodging the Greater Student Debt Crisis?
Still, compared to other progressive candidates who have announced sweeping measures to forgive student debt, Harris hasn’t announced much of a plan to tackle the wider crisis: 45 million Americans owe a total of $1.56 trillion in student loans.
One page of Harris’ website covers her intentions to “provide relief from crushing debt today, and ensure tomorrow’s students can attend college debt-free.” This includes letting current student debt holders refinance their loans at lower rates, expanding Income Based Repayment plans, cracking down on for-profit colleges and lenders who defraud students, and fighting to make community college free and four-year public college debt-free, but doesn’t include forgiving any existing student debt.
In April, Massachusetts Senator Elizabeth Warren announced a plan to eliminate 95 percent of student debt on top of making public college tuition free, investing an additional $100 billion in Pell grants, and forming a $50 billion fund for HBCUs, all of which would be funded through her proposed wealth tax on the ultra-rich. Similarly, Vermont Senator Bernie Sanders announced a bill in June to cancel all outstanding student debt and make public college tuition-free.