Near $ 3 billion in canceled student loans, racial wealth gap could close
Continuing on his campaign promise to cancel student loans in increments, President Biden has already canceled a total of $ 2.8 billion in debt, with more plans on the horizon. Education is an area 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 debt than their white counterparts, and this disparity worsens by 7% every year after borrowers leave school. As the student debt burden worsens, wealth inequality continues to be the debt disparity among black students, so getting rid of that debt could finally push the needle forward to close the gap. of racial wealth.
The breakdown you need to know: CultureBanx A quick recap of events points out: In March, Biden got rid of 72,000 loans that amounted to $ 1 billion. Since then it has moved to cancel $ 1.3 billion in loans for 41,000 borrowers total and permanent disability, for a total of $ 2.3 billion in loans. Just last month in June, Biden got rid of an additional $ 500 million in student loans, again under the defending borrowers against student loan repayment rule, the current total of canceled loans s’ amounting to $ 2.8 billion.
Biden’s plan to cancel student loans is part of a larger strategy to make higher education more affordable and less financially burdensome. However, it’s important to note that while $ 3 billion is a big number, that number represents about 0.1% of the $ 1.7 trillion in outstanding student debt.
For those who attended public colleges or historically black colleges and universities (HBCU) earn less than $ 125,000 per year The cancellation of student debt is a huge victory, because it’s no secret that the cost of a university education is rising faster than American salaries and the rate of inflation, 8 times faster, to be exact.
Dazed and confused school: Students of color typically rack up hundreds of thousands of dollars in student loan debt, meaning they are unable to focus on other financial goals like buying a home, paying off debt of credit card and savings for retirement. Eliminating this would reduce the racial wealth gap for young families, with 86.6% of black students taking out federal loans to attend four-year colleges, compared with just 59.9% of white students.
In addition, the amount of loans past due 90 days or more has not changed much since 2012, proof that the financial burden is still high, as is the unemployment rate. now at 9.6% 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.
Keep in mind that the question of whether taxpayer dollars should be used to pay off student loans is at the heart of the federal loan cancellation debate. It is still unclear exactly how the cancellation will progress, and since loan cancellation may not be fully universal, which means it may not apply to all student loans taken out by individuals. .