President-elect Joe Biden wants to write off $ 10,000 in student loan debt for all borrowers, and the rest of the debt for those who attended public colleges or historically black colleges and universities (HBCU) earn less than $ 125,000 per year. The student debt burden exacerbates wealth inequalities and continues the debt disparity among black students. It’s no secret that the cost of a college education is climbing faster than US salaries and the inflation rate, 8 times faster, to be exact, so getting rid of that debt could finally help pay off the debt. racial wealth gap.
The breakdown you need to know:
CultureBanx reported that Biden’s plan to cancel student loans is part of a larger strategy to make higher education more affordable and less financially burdensome. Education is one of the areas where black Americans suffer the most due to institutionalized racism, especially with student loans. According to a recent study by the journal Sociology of Race and Ethnicity, young black adults take on 85% more student debt than their white counterparts, and this disparity grows by 7% every year after borrowers leave school. .
Students of color typically accumulate hundreds of thousands of dollars in student loans. Eliminating this would narrow the racial wealth gap for young families, with 86.6% of black students taking out federal loans attend four-year colleges, compared to just 59.9% of white students. The average black graduate has $ 7,400 more in student debt than a white peer. Not to mention that white borrowers repay their education debt at a rate of 10% per year, compared to 4% for black borrowers.
Debted student loans:
Since students of color have to focus on paying off student debt for longer, it means they are unable to focus on other financial goals like buying a home, paying off debt of credit card and savings for retirement. Studies show that white men have repaid 44% of their student loans twelve years after graduating from college, while black women owe 13% more.
In addition, the amount of loans past due 90 days or more has not changed much since 2012, proving that the financial burden is still high, as is the unemployment rate. now at 10.3% for African Americans. Specifically, HBCU students are more likely to default over a 12-year period than African Americans attending other four-year colleges and universities, according to the Wall Street Journal.
Biden has not indicated whether he will use an executive order to try to cancel student loans. However, he specifically asked Congress to write off student loan debt. Sadly, there is no guarantee that Biden or Congress will cancel student loans at this point, but the benefit of closing the racial wealth gap is huge if they do.