In another major setback for getting rid of student loans, President Biden will not include any student loan cancellation in his annual budget. Young Black adults take on 85% more education debt than their white counterparts, and that disparity compounds by 7% each year after the borrowers leave school, according to a recent study in the Sociology of Race and Ethnicity journal. It’s no secret that the cost of college is climbing faster than American wages and the inflation rate, 8x faster, to be exact, so getting rid of this debt could have finally moved the needle on closing the racial wealth gap.
The Breakdown You Need To Know:
CultureBanx reported that while running for president, Biden wanted Congress to cancel up to $10,000 of student loan debt, but hasn’t put any policy for student loan cancellation in place through an executive order. Lack of inclusion in Biden’s budget proposal is a main indication that he will not cancel student loan debt, along with the fact that he’s never included any language regarding the topic in his stimulus packages or infrastructure package.
Biden’s plan to cancel student loans was supposed to be part of a broader strategy to make higher education more affordable and less financially burdensome. Education is one area where Black Americans are hurting the most due to institutionalized racism-especially with student loans.
For those who attended public colleges or historically Black colleges and universities (HBCUs) earning less than $125,000 a year getting rid of student loan debt was supposed to be a huge win. The burden of student loan debt is worsening wealth inequality and continues the debt disparity among Black college students.
Cancel Student Loan Culture:
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 credit card debt, and saving for retirement. Eliminating this would narrow the racial wealth gap for young families, with 86.6% of Black students taking out federal loans to attend four-year colleges, compared to just 59.9% of white students.
What’s more, the amount of loans that are 90 or more days delinquent has not changed much since 2012, proving that the financial burden is still high, just like 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.
Biden has extended payment forbearance and offered a proposal for free college, but is resistant to forgiving debt. The student loan payment pause is expected to expire September 30, 2021.
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