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Millions of Americans are drowning in student loan debt.
The nation’s federal student debt now tops $1.6 trillion after ballooning for years. More than 43 million Americans have federal student debt, with almost a third owing at minimum $10,000 and more than half owing less than $20,000, according to the latest federal data.
$10,000 in student loan forgiveness for most borrowers would eliminate the student debt for 16 million borrowers, according to the Center for American Progress. Nearly one in three student loan borrowers would have their student debt completely wiped out through this initiative.
Though this action is historic, for Black college graduates, all indications are much more debt relief would be needed.
Black folks have to borrow more because of the existing racial wealth gap in America.
Black families’ median wealth is less than 15% of that of white families, according to the Federal Reserve’s 2019 Survey of Consumer Finances. Among student loan borrowers, that gap is even more pronounced, research has found.
Black borrowers’ wealth represents roughly 5% of white borrowers’ wealth, according to a paper by Raphael Charron-Chenier, Louise Seamster, Thomas M. Shapiro and Laura Sullivan titled, “A Pathway to Racial Equity: Student Debt Cancellation Policy Designs.”
“Because education is debt-financed, our education is not having the same effect,” said Seamster, an assistant professor of sociology and criminology and African American studies at University of Iowa.
“It is not leading to wealth for Black families and, in fact, it is actually exacerbating wealth inequality.”
Reparations would assist Black families facing student loan debt.
Higher education is getting increasingly more expensive. Because Black households tend to have less wealth, a greater number have to borrow money to get a degree — and the amounts they are borrowing are larger than those of their white counterparts, explained Charron-Chenier, a sociologist and assistant professor at Arizona State University.
About 24% of Black adults say they have federal student loan debt, compared with 14% of white adults, according to a CNBC + Acorn’s Invest in You Student Loan Survey conducted by Momentive.
Black college graduates owe an average $7,400 more than their white peers the moment they graduate, a report from Brookings Institution found. Four years after graduation, they owe an average $52,726, compared with $28,006 for the average white college graduate, according to the report, which included nonborrowers in the average.
Meanwhile, some 66% of Black borrowers owe more than they originally borrowed 12 years after starting college, another analysis found.
“That’s because interest accumulates on their loans that is greater than the payments that they’re able to afford on their loans,” explained Charlie Eaton, an assistant professor of sociology at the University of California, Merced who took part in the analysis.
It’s throwing a bucket of ice on a forest fire,” NAACP President and CEO Derrick Johnson recently told CNBC. “Cancellation must be a minimum of $50,000.”
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