Biden made a major dent in the student debt crisis — and it's time he does the same for the growing medical debt load in the US, attorneys and advocates say

Half of all Americans with federal student loans will see their debt wiped out completely, thanks to the Biden administration. Student loans are just one piece of a household debt crisis that affects millions of Americans.

President Joe Biden announced at the end of August that up to $20,000 in student debt for federal borrowers making under $125,000 a year would be eliminated. It takes a chunk out of what is often a prohibitive burden for many Americans, with interest snowballing into a collection of bills that can't be paid off.

Medical debt can be too much for some people. According to the Kaiser Family Foundation, there are 23 million Americans who have medical bills of at least $250. Over three million people have medical bills that are not paid. The Consumer Financial Protection Bureau has found that medical debt is not immune to unfair practices.

Medical and student debt become conduits for potentially devastating financial consequences, leading to people losing their homes and facing lawsuits. Medical debt is an unavoidable situation, whereas student loans are often a choice.

The staff attorney at the National Consumer Law Center told Insider that they had no choice but to act. Medical debt can happen to anyone and it can't be planned.

Medical debt creates "a racial wealth gap, and a racial health gap" in addition to burdening young and old people alike

Data shows that black college graduates are more likely to be in debt than their white peers because they have less money. One in three black adults have past due medical bills, compared to less than one in four white adults, according to a study she published this year. Black households are more affected by aggressive medical debt collection practices than white households.

She said there was a racial health gap. Black families are less able to weather the bills because they have less wealth.

Younger adults are more likely to have student debt. The US Census Bureau found that nearly half of medical debt is owed by people under the age of 44. According to the research center, more of the younger generation owe student debt than other generations.

Older people are impacted. Student-loan borrowers over 50 are continuing to hold debt burdens that have been decades in the making forcing them to push off retirement and older Americans who do not yet qualify for medicare can experience similar issues with medical debt.

Unpaid medical bills create major financial consequences

It can be devastating if you default on medical debt. One way in which medical debt can become intertwined is through liens on a person's home, which can be used as a means of repayment. As much as 25% of your paycheck can be taken if you default on student or medical debt.

"People are less likely to get a loan, and there are aggressive collection practices like lawsuits," said Ruth Lande, Vice President of Hospital Relations at RIP Medical Debt.

Student debt lawsuits are more common than medical debt ones. Student loans and medical debt are both common collections trade lines in the US. Collections agencies use a lot of aggressive tactics for both. Government oversight of collection agencies is weak according to the National Consumer Law Center.

'There's a lot of we don't see because of how opaque the medical industry is'

Legislation that attempts to tackle student debt is a helpful first step, but doesn't go far enough.

The No Surprises Act was one of the actions taken by the federal government. It was a milestone in the effort to lower health care costs. 70% of medical debt was removed from credit reports after working with the Consumer Financial Protection Bureau.

Increasing scrutiny over inaccurate medical billing was one of the ways the White House helped Americans with medical debt.

Some of the burdens faced by Americans are alleviated, but there are some blind spots.

Haynes pointed out that a lot of medical debt is paid with credit cards, which makes it not register as medical debt. Credit reports will continue to show medical debt paid with credit cards.

The Medical Debt Program Lead at the Debt Collective told Insider that even though hospitals receive billions of dollars in tax breaks in exchange for providing charity care to low-income patients, hospitals often skimp on it. Most of America's hospitals are not for profit. She wants the IRS to make sure hospitals are kept in check.

There's a lot we don't see because of the medical industry's lack of transparency.