SEPTEMBER 2022: FRONTPAGE NOTE: Student Loan Forgiveness and Debt Crisis
BY: JONATHAN STERLING, PAGE COMMUNITY MANAGER
& KENYATTA JAMES, PAGE DIRECTOR
“Nearly two-thirds of the $1.7 trillion in student debt in America is held by women, and Black borrowers are more negatively affected due to systemic racism. (Sanchez)
The American Dream is starting to seem increasingly distant as time goes on. Life milestones like college, home ownership, and wealth are slipping out of the hands of millions of Americans each day. However, in what seems like an uphill battle, we have finally made progress. President Biden has announced a (limited) student loan forgiveness program, but how much will it really do to address the yawning racial wealth gap?
We know that for many borrowers, loans come with a high price: high-interest rates, fees, and damage to credit scores. Loan products, especially private loans, are often very complex, and it is hard for young people to anticipate the heavy lifetime burden they are assuming.
Black students are disproportionately impacted by the debt crisis, compounded by the impact of the economic policies of yesterday, with far-reaching implications for future economic security. Just 46% of Black Americans own a home, versus 76% of white Americans. (Johnson, Cole). Student loans, especially private loans, are often predatory, and the main targets are Black students, predominantly Black women, who owe an average of $41,466 in student loan debt – 22% more than white women (Hess 2021).
Debt is the number one obstacle to owning a home, one of the main sources of generational wealth for Americans. Equity in a home allows one to build capital and engage in the economic ecosystem with confidence. Educational attainment is a key to accruing wealth and affording a home. Even though 1 in 4 Black women are college graduates, the wealth gap between Black women and almost every other demographic is growing. A clear culprit is the substantial number of loans that Black women must pay back.
We know the problem but are the solutions being offered sufficient to fix them? Are they sufficient to allow Black people, especially Black women, space in the American economy? While many odds may be against Black women, 17% of Black women are starting their own businesses. That’s compared to just 10% of white women, and 15% of white men (Kelly, Majbouri, Randolph). The entrepreneurial fire is there, but the help is not. We know that up to $20,000 in loan debt will be forgiven for Pell Grant recipients, but $20,000 only gets the average Black woman about halfway out of debt. We need to do more if Black women are going to be able to compete as entrepreneurs, homeowners, and stakeholders. After the false promise of “forty acres and a mule” and decades of Jim Crow, the economic hurdles facing Black Americans are well known. Now more than ever, we need to advance solutions that will tackle systemic racism, such as a cancellation of all student loan debt. This is not a plea for a handout, but a chance to even the odds. As Johnson and Cole put it, “after generations of racial oppression, it would finally open the door for so many Americans to become homeowners and generate wealth, not only for themselves but also for their children and grandchildren” (Johnson, Cole).
Black business is an essential part of our economy, and we at the Economy League are trying to do our part. But most efforts are reactionary. We need a proactive approach. Canceling a larger amount of student loan debt sets the pieces in motion for Black businesses to flourish. Debt looms over this country and specifically our most marginalized groups. We must do better to eliminate the disparity student loan debt has caused.
Johnson, Opinion by Derrick. “Opinion: NAACP CEO: Biden's Reported Plan to Cancel Student Debt Isn't Enough.” CNN, Cable News Network, 24 Aug. 2022, https://www.cnn.com/2022/08/24/perspectives/student-loan-debt-biden-naacp/index.html.
Sanchez, Olivia. “Black Women Are Uniquely Burdened by Student Debt, Report Finds.” The Hechinger Report, 14 Apr. 2022, https://hechingerreport.org/black-women-are-uniquely-burdened-by-student-debt-report-finds/.
Kelley, Donna, et al. “Black Women Are More Likely to Start a Business than White Men.” Harvard Business Review, 11 May 2021, https://hbr.org/2021/05/black-women-are-more-likely-to-start-a-business-than-white-men.
Hess, Abigail J. “Black Women Owe 22% More in Student Debt than White Women, on Average.” CNBC, CNBC, 14 June 2021, https://www.cnbc.com/2021/06/14/black-women-owe-22percent-more-in-student-debt-then-white-women-on-average.html.