Statement on student debt relief

Thirty years ago, student loan debt was much more manageable than it is today. Student loan debt as a percent of the income of an average American has nearly quintupled since the 1980s, from 10% to 48%. As such, President Biden's student debt forgiveness program, announced on August 24th, which cancels up to $20,000 of undergraduate student loan debt, will provide much-needed financial relief to millions of Americans saddled by student debt. Biden campaigned on canceling $10,000 of student loan debt, so increasing that total for Pell Grant recipients represents that rare time a politician actually over-delivered on a campaign promise.

However, USBC / ARTI echo the sentiments expressed by NCRC, our national partner, that this one-time cancelation, while a welcomed and significant gesture, doesn't go far enough in providing financial relief, especially for those most burdened by student loan debt: people of color, in particular Black Americans. And, in fact, it may increase the wealth gap* between white and Black Americans in the long term.

Four years after graduation, for example, the average Black American still owes $53,000 in student loan debt, while the average white American owes $28,000. Biden's gesture will therefore make a significant dent in the student loan debt held by white borrowers, particularly Pell Grant recipients, whereas even those Black Americans who qualify for the full $20,000 debt cancelation will remain saddled by a majority of their student debt. This means that many white Americans, once unburdened by most or all of their student loan debt, will be able to pursue wealth-building endeavors like buying a house that could pull them permanently out of poverty, whereas Black Americans will not have such an opportunity, keeping Black Americans in a cycle of poverty and debt that will persist for generations without the capacity to build equity through homeownership. Even those Black Americans who will manage to qualify for and buy a home will likely have larger mortgages and higher monthly payments as a result of having more debt and, by extension, worse credit, so the equity they may manage to build will likely be lower than that of their white brothers and sisters.

We do not want to understate the significance of having $10,000-$20,000 of student debt wiped off the books. There is little doubt that millions Americans will find significant relief from Biden's student debt forgiveness program, including people of color. However true economic justice would have come from a cancelation of all student debt, which would have disproportionately benefitted Black Americans given that they bear the brunt of the student debt burden. Likewise, without broad structural changes to the economy, including solutions not just to the rising cost of higher education but also for our out-of-control housing and healthcare costs and our flatlining wages, this debt cancelation will only provide temporary relief and may in fact make certain racial inequities even worse.

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*If the average family’s wealth were to grow at the same pace as it has for the past three decades, it would take Black families 228 years and Latino families 84 years to amass the same amount of wealth that White families have today. Source: Prosperity Now