By Kat Welbeck and Mark Huelsman | June 22, 2023
It’s fitting that, this Juneteenth, we’re awaiting two of the most consequential court decisions for Black economic well-being in recent memory. Along with a case to decide the future of race-conscious affirmative action, which will have deep consequences for the ability of our higher education system to adequately serve Black and brown students, the Supreme Court will render a decision in the cases challenging President Biden’s plan to cancel student loan debt.
While student loan debt has spiraled out of control over the past few decades, leaving damaging impacts on household balance sheets and the broader economy, it’s no secret that the rise in debt has been felt most acutely by Black households in particular. Student debt, and higher education generally, is a key contributor to the racial wealth gap. It is both a cause and consequence of public policy failing to overcome discrimination in labor, housing markets, tax policy, etc; in many instances, policies were created with the express intent of excluding Black people from accessing the full rights and benefits of citizenship.
It’s no secret that the rise in debt has been felt most acutely by Black households . . . .
Our nation’s shameful and persistent wealth gap results in Black student loan borrowers shouldering a disproportionate share of the student debt burden—borrowing at greater frequency and at higher rates than their white peers—while also reckoning with discrimination and inequality in the labor and housing markets. Nearly 90 percent of Black students take on student debt for college as compared to 66 percent of white students, and among all households, only 17 percent of white adults have any student debt at all, compared to 27 percent of Black adults. Student debt is also rising as a share of income for Black households, making them less likely to offload debt in any sort of timely manner. In fact, since 2009, median student debt among Black households has grown at a rate nearly ten times that of median income.
Too many Black borrowers experience student loans as a debt trap, with exploding balances that result in tens of thousands of additional dollars owed, even decades into repayment. Nearly two-thirds of black borrowers owe more than they borrowed 12 years after starting school, and three-quarters of student loans in majority-minority communities have a higher balance than the original loan. While we wait for the Supreme Court to issue a ruling on President Biden’s plan to cancel up to $20,000 of student loan debt, and as the Administration plans to force tens of millions of borrowers into repayment for the first time in three years, any analysis of student debt must center the harm that the system regularly inflicts on Black student loan borrowers.
There remains a persistent narrative that student debt cancellation is an investment targeted at a privileged class of households, because those with college degrees often earn higher wages, or because a small portion of student debt would go toward those with graduate degrees. But as with so many persistent narratives, this remains a flawed perspective that ignores how education and wealth intersect for non-white families. One only needs a surface-level understanding of the history of the racial wealth gap to understand that middle-income Black households—exactly those for whom student debt is most burdensome—have far fewer opportunities to build long-term, intergenerational wealth. In fact, Black college-educated households hold less wealth than white households with two fewer levels of education. Further, Black students are often provided opportunity in name only; for example, around half of all Black students pursuing doctoral study are enrolled in for-profit colleges, with an average debt of over $128,000, and borrowing for for-profit graduate education is a key contributor to racial disparities in student loan debt and repayment.
But, unfortunately, the reality of predatory debt and empty promises of economic opportunity is a continuation of something many Black families already know.
Juneteenth marks the date that enslaved Black Americans in Galveston, Texas received news of their emancipation—more than two years after President Lincoln issued the Emancipation Proclamation. In the century and a half that has followed, the struggle for basic economic dignity has endured through fights for access to good jobs, wages, housing, and economic opportunity. This Juneteenth, we continue the fight for economic justice and for Black Americans to have the full rights and privileges of the American Dream via access to the same basic educational opportunity, including a future without burdensome debt, that white families can often take as a given. As we commemorate the deferred promises of freedom, we must continue to push for this nation to live up to the promise of its ideals, including addressing the deep and historic economic harms on Black families that policymakers have failed to remedy.
This Juneteenth, we continue the fight for economic justice and for Black Americans to have the full rights and privileges of the American Dream via access to the same basic educational opportunity, including a future without burdensome debt, that white families can often take as a given.
In the next few days, the Supreme Court will decide whether to uphold the law and permit President Biden’s historic student debt relief plan to proceed, in turn taking a transformational step that will drastically reshape economic opportunities for millions of Black households. Dismantling our unjust, debt-financed higher education system paves the pathway for advancing racial and economic justice.
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Mark Huelsman is a Student Loan Justice Fellow at the Student Borrower Protection Center.
Kat Welbeck is the Director of Advocacy & Civil Rights at the Student Borrower Protection Center. Prior to joining the SBPC, she worked in the External Affairs Division of the CFPB.