Essay Exploring the Relationship between Student Loan Forgiveness, the Pell Bonus, and Race
An Essay for the Learning Curve
Bryan J. Cook, Alexandra Tilsley
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In August, the Biden administration announced a plan to forgive up to $10,000 in federal student loans for almost all borrowers, with up to an extra $10,000 for borrowers who had received Pell grants. The additional forgiveness for Pell borrowers intends to address the racial wealth gap, as Black and Hispanic students are more likely to receive Pell grants than white students, acknowledging the common critique that a broad student loan forgiveness plan primarily benefited white borrowers. Analyzing a sample of a recent cohort of borrowers, the data show that although the “Pell bonus” has little impact on the racial distribution of recent students who will receive student loan relief, it significantly increases the share of Pell recipients, of all racial and ethnic groups, who will have all their federal loans forgiven.

Key Findings

Observing a cohort of students who first enrolled in 2011–12 and were tracked through 2016–17, data show the following:

  • Pell recipients are less likely than their non-Pell peers to have earned a bachelor’s degree and are nearly twice as likely to have left school with no credential.
  • Among all non–Pell students eligible for $10,000 in debt forgiveness, white borrowers make up the largest share of forgiveness recipients.
  • Because Pell recipients are more likely to be Black or Hispanic, targeting Pell recipients likely benefits students of color and students who left school with no degree or credential.
  • The addition of the $10,000 Pell bonus increased the share of recent Pell recipients who would have the full amount of their federal student loans forgiven from 37 percent to more than 50 percent.
  • The students who would have the largest share of borrowers debt-free are American Indian or Alaska Native borrowers (66 percent), Hispanic borrowers (61 percent), and Black borrowers (56 percent).


Though the future of loan forgiveness is to be determined, analyzing who will benefit from loan forgiveness, especially with the additional $10,000 for Pell recipients, helps clarify whether the proposed plan can narrow the racial wealth gap. The data show that among recent students, Pell borrowers who benefit from the additional $10,000 in student loan relief are less racially diverse than the overall population of Pell borrowers, in part because many recent Pell borrowers have debts less than $10,000. Though the Pell bonus does not appear to shift the racial distribution of student loan relief among recent students, it does significantly increase the share of racially underrepresented borrowers who will have all their federal student loan debt erased.

If the student loan forgiveness plan is implemented, the Biden administration will need to track the short- and long-term outcomes of borrowers who applied for forgiveness to understand both the full value of this investment and whether it advances racial equity.

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Additional Resources

Research Areas Education
Tags Higher education Asset and debts Racial equity in education Paying for college
Policy Centers Center on Education Data and Policy