Black Americans, who bear a disproportionate share of student loan debt, will be severely impacted by President Joe Biden’s proposals to cancel student loans.
“The burden is particularly heavy on Black and Hispanic borrowers, who on average have less family wealth to pay for it,” Biden stated in a tweet. “And the pandemic only made things worse.”
$10,000 in loans will be forgiven for people making under $125,000 annually. Up to $20,000 in loans might be forgiven for borrowers who obtained federal Pell grants, funds provided to undergraduate students who exhibit “exceptional financial need.”
The White House estimates that 20 million borrowers, or about 45% of all borrowers, will have their debt forgiven.
A new strategy will provide more lenient loan repayment terms for the remaining 55%. This entails, among other things, covering the borrower’s unpaid monthly interest and reducing the amount of money that borrowers must pay each month in half from 10% to 5% of discretionary income.
“I just can’t underscore what a big deal this is in millions of borrowers’ lives,” stated Kyra Taylor, a National Consumer Law Center lawyer.
Many racial advocacy organizations applauded Biden’s selection, calling it “a step in the right direction.”
“Approximately 1 in 4 Black Americans have negative net worth — meaning their total debt exceeds their total assets,” the civil rights group named National Action Network said in a statement. “The administration expects the first $10,000 of debt relief will move over half a million Black Americans from a negative to a positive net worth.”
The research group Education Data Initiative found that 71% of Black students borrow money compared to 56% of White students.
The Department of Education discovered that, on average, black college graduates owe $25,000 more in student loans than white grads. Additionally, according to the Education Data Initiative, 48% of Black students still owe an average of 12.5% more than they borrowed four years after graduation.
According to the DOE, 72% of Pell award beneficiaries are black students.
According to the White House, the average Black borrower will have their loan balance reduced by almost half, and more than one in four Black borrowers will have their loan balance erased.
Particularly black women are disproportionately burdened by student loan debt. According to figures from the Census Bureau, they are responsible for about two-thirds of the country’s over $2 trillion in outstanding student loans.
As per the higher education research and advocacy group Excelencia in Education, the $10,000 loan cancellation plan will fully forgive the federal loan debt for about half of Latino borrowers.
“Because of racial disparities in intergenerational wealth, Black and Latino students aren’t just more likely to borrow student loans to go and get an education, but we also know that predatory for-profit colleges that cost more to attend also target Black and Latino populations around the country, which results in many Black and brown borrowers having larger balances,” Taylor of National Consumer Law Center stated.