Ending the Racism That is Student Loan Debt
For most Black, Brown and Indigenous college students, it completely limits - and in many cases stunts - the chance of upward mobility promised by higher education. We'll need to do more
Doug Ryan | Prosperity Now
As the end of segregation forced predominantly White colleges and universities (or “PWIs”) to open their doors to Black, Indigenous People of Color (BIPOC), the cost of entry - tragically - began to rapidly and dramatically increase. We're offered a great overview of the racist origins of astronomical college costs in this explainer video here …
If race was no longer allowed as a political tool for segregationists, wealth and income would quickly replace it.
To overcome these new economic barriers to higher education, students of color, especially Black students, were forced to take out student loans. With the stark disinvestments in public universities and colleges leading to drastic increases in the cost of college, loan repayment with high interest rates became an ongoing punishment for primarily Black, Brown and Indigenous populations. Each group simply sought economic mobility through college achievement. However, with Black and Latine students holding more debt for longer and being more likely to default on their debt, students of color now bear the burden of this crisis.
It completely limits - and in many cases stunts - the chance of upward mobility promised by higher education.
More than 45 million borrowers carry an estimated $1.6-$1.9 trillion dollars in student debt in the United States - that is approaching nearly 10 percent of the nation's Gross Domestic Product. That level of debt not only drains the pockets of individual borrowers, but it drains over $100 billion dollars from the nation’s GDP annually. Student loan debt also disproportionately impacts communities of color, especially Black communities. That also prevents a larger share in those same Black communities from becoming successful high-earning professionals who contribute to our consumer driven economy. That prevents families from buying homes and paying property taxes which contribute to the overall health and function of local and state governments. We can’t accept that three-quarters of our economy is driven by consumer spending, yet still tolerate nearly 14 percent of the population carrying such a sizable load of crushing financial burden, with almost half of that demographic carrying anywhere from $10,000 - $50,000 of just student loan debt alone.
Fortunately, President Biden’s student debt relief package is a viable and rather bold first step in confronting this crisis by, first, capping repayments at 5 percent of income. The package also offers $10,000 in relief to non-Pell Grant recipients and a sizable $20,000 of relief for those who received Pell Grants. This applies to individuals making less than $125,000 or less and $250,000 or less for married couples. As 72 percent of Black students and 60 percent of Latine students are Pell recipients, this form of forgiveness will positively impact communities of color the most. In fact, half of Latine students and the majority of Indigenous students stand to have their debt eliminated completely. As Axios reports “nearly 90 percent of those benefiting from this new policy earn less than $75,000” with about 21 million – nearly half of borrowers – soon to see a zero balance on their next student loan bill once they apply.
While we cannot ignore the significance of this effort - we shouldn’t stop there. This level of relief is a tremendous step in the right direction, but more will be needed to make a serious dent in the student debt crisis and it’s contribution to an alarmingly fast-growing racial wealth gap.
At Prosperity Now, for example, our mission is to build an economy that is just, fair, and free from structural racism. While the Biden Administration’s student loan debt relief package is an important move to remove the burdens of student loan debt from Black, Brown, and Indigenous individuals, we need more work on this and other areas. While debt relief is beneficial, we must also tackle punishing higher education tuition increases.
We encourage Congress to work with states to reduce and remove tuition-based barriers to higher education and push for the federal government to crack down on predatory loan products, private schools, and public institutions that are perpetuating cycles of debt and failing to provide students with their degrees. We will also continue exploring ways that wealth influences student debt and how state budgets can be restructured to provide free and more affordable community college options.
We should all thank the Biden Administration for this critical opportunity - and look forward to working with the White House, Congress, and our networks of policymakers and community organizations to find additional solutions to the student debt crisis. In fact, as opponents of the debt relief program will likely contest it in federal court, we challenge them to propose comprehensive measures to address student debt and the escalating costs of education. We’ll also ask them: How does not addressing the student loan debt crisis make the economy better? Of course, it doesn’t. In the meantime, we'll continue that essential push for racial economic justice for current, former, and future students of color. We cannot achieve racial economic justice if BIPOC students continue to face barriers, erected by racism, to the higher education system and to opportunity overall. Organizations such as Prosperity Now are committed to that struggle. We're dedicated to removing economic barriers like student loan debt so individuals and communities of color can achieve both justice and prosperity for all.