Biden’s student loan forgiveness most needed by Black Americans

In August, when President Joe Biden launched a historic plan to cancel up to $20,000 in student loan debt for tens of millions of Americans, one of the policy’s goals was “to reduce the racial wealth gap.”

Shortly after the president’s announcement, critics of student loan forgiveness brought a series of legal challenges against the plan, saying it was an abuse of executive authority, and soon the Biden administration had to pause the program.

The Supreme Court has now agreed to hear both cases by the end of February. Legal experts say the policy faces a narrow path to survival with the courts, given its conservative majority.

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If the relief plan fails, the consequences for Black Americans will be severe, advocates say.

“Not only will this be a devastating blow to Black Americans, but to our entire economy — the racial wealth gap will widen, and the cycle of economic inequality will continue,” said Wisdom Cole, national director of the NAACP’s youth and college division.

Here are three reasons why the student loan crisis is worse for Black Americans, and why they feel they’re losing out on debt forgiveness, experts say.

The explosion of outstanding student debt over the past few decades has been blamed for widening the racial wealth gap. Last year, Black families 25 cents for every dollar of white family wealth, the Federal Reserve Bank of St.

Because black families have less wealth, their children typically have to borrow more for their education.

About 85% of black students graduate with a bachelor’s degree carrying student debt, compared to 69% of white bachelor’s degree recipients, according to data from higher education expert Mark Kantrowitz.

And since student loans are often taken relatively early in a person’s life, it can then be harder to hit other milestones down the line that help build wealth, such as buying a house and investing, experts say.

“Student loan debt is a product of the racial wealth gap and a tool that increases racial inequality,” said Jaylon Herbin, director of federal campaigns at the Center for Responsible Lending.

In 2018, about 40% of black college graduates said their student loans delayed their ability to buy a home, compared to 34% of their white peers, Kantrowitz found.

For-profit schools have been blamed for misleading students about their programs and career outcomes — and for preying on people of color.

“For-profit schools disproportionately target black and low-income students across the country,” Herbin said.

Nearly 18% of black undergraduates enroll in for-profit colleges, compared with 11% of white undergraduates, according to Kantrowitz.

“Black students are more likely to enroll in for-profit academic institutions with lower degree completion rates,” Herbin said. “Therefore, they are often forced to pay off loans for higher education that does not improve their job prospects.”

Within 12 years of entering college, nearly half of for-profit students default on their student loans, according to the Brookings Institution.

Because of historic racial and economic inequality, black student loan borrowers struggle to repay their loans more than their white peers.

Before the pandemic, the default rate for black student loan borrowers was more than 30%, compared to 13% for white borrowers, according to the Center for American Progress. Meanwhile, white borrowers pay off their education loans at a rate of 10% a year, compared to 4% for Black borrowers.

Without student loan forgiveness, this repayment challenge will only get worse, Cole said.

“Student debt burdens may follow black borrowers forever, undermining their ability to achieve the upward mobility that higher education should guarantee,” he said.