Student debt is hitting African Americans the hardest. These experts have a plan to fix it.
The statistics are startling: African American college students borrow more often, owe more money and default more frequently than any other racial group on their education loans.
The racial disparities in student debt are driven by wealth inequality and lackluster funding of institutions that enroll the highest numbers of black college students, according to research.
Concern about the ways in which black students shoulder the burden of student debt has been propelled onto the national stage during the 2020 Democratic presidential primary race. Several candidates have called for greater funding of historically black colleges and public universities to reduce the need to borrow, while Sen. Elizabeth Warren (Mass.) has said her debt cancellation proposal would benefit 80 percent of black borrowers.
It is a time of big ideas and bold plans, but politicians are not the only ones with them. Higher education experts are sharing their own solutions to address the disproportionate impact student debt is having on the black community. Here are excerpts of ideas they have presented:
● Jalil Mustaffa Bishop, postdoctoral scholar in the higher education division at the University of Pennsylvania
The problem is that student loans were presented as a false solution for current and future workers enduring racial capitalism, particularly black people.
The idea was that black workers’ elusive quest for higher wages along with job security and benefits could be realized if they earned a higher education credential. A credential would finally grant us access to “the good jobs.” However, this did not work.
Black degree earners, however, are uniquely underpaid, underemployed and unprotected. The rampant racism across labor markets explains our crisis-level student loan outcomes. In an effort to escape bad jobs, black people borrow loans at whatever cost to attend colleges no matter the quality.
But what if we focused less on black people getting the good jobs and more on turning the bad jobs good? The bad jobs that pay poverty wages, offer no benefits and shackle labor rights all interlocked with racist employment practices. If we remove the labor conditions that make debt desirable for mobility and necessary for survival, then student loans will become obsolete.
This is a call for legislation to create good jobs — increase the minimum wage to a living wage, federally guarantee employment, provide universal health care and strengthen workers’ organizing power. As important, we need labor policies that explicitly focus on empowering workers in sectors like caretaking and service work where black people already are. So yes — cancel student debt, fund free college, but also make labor anti-racist.
● Ashley Harrington , senior policy counsel at the Center for Responsible Lending
To alleviate the black student debt crisis, we must provide relief to the borrowers who are currently struggling under the weight of their student debt, ensure real accountability for for-profit institutions, and support historically black colleges and universities in their mission of educating black students.
This requires broad-based debt cancellation of up to $10,000 for all borrowers in repayment.
Further, we must drastically streamline income-based repayment options by collapsing them to include only one plan that calculates payments based on 8 percent of discretionary income above 250 percent of the poverty line and has a repayment period of no more than 15 years. These two reforms would immediately allow borrowers to make basic repayments on their loans but also begin to build long-term financial health. While the reforms would have an incredible impact for all borrowers, black borrowers would especially benefit.
However, given how entrenched the racial wealth gap is, we must go even further if we plan to truly address the black student debt crisis and its ramifications. This means a large investment in historically black colleges as both education providers and economic engines as well as a concentrated effort to curtail the abuses of the for-profit college industry.
● William A. Darity , professor of economics at the Samuel DuBois Cook Center on Social Equity at Duke University
● Fenaba Addo , Assistant Professor at University of Wisconsin-Madison
We believe that in order to address the black student debt crisis, we need to eliminate racial wealth inequality. Why? Because black-white disparities in student loan debt are deeply rooted in racial wealth disparities. Lack of resources to pay for college costs means students need to borrow more, and issues with repayment of debts highlight persistent financial constraints upon leaving school.
At the very least, a two-pronged approach is needed to address the black student debt problem. The first approach will tackle the existing debt overhang that disproportionately burdens black young adults. This can be accomplished via a program of loan forgiveness for all students holding loan debt associated with their college years. Prevention of a renewal of the crisis in the future will require a second, more dramatic approach. We believe what is needed are actionable proposals to eliminate racial wealth inequality.
Sen. Cory Booker’s Opportunity Accounts proposal — or a similar arrangement that provides young adults with an endowment calibrated on the basis of their parents’ resources — can help ameliorate the size of the racial wealth gap. However, a reparations program will need to be implemented that brings the black share of ownership in the nation’s wealth from its current 2.6 percent to at least 13 percent, a proportion consistent with the black share in the nation’s population.
● Krystal L. Williams , assistant professor at the University of Alabama
A holistic approach is needed to address the student debt crisis.
Initiatives that focus on higher education finance should be central to this holistic approach. Because a substantial percentage of black students come from low-income families and rely on grants to pay for college, these initiatives should promote increased support for need-based aid such as the Pell Grant, and emphasize increasing the purchasing power of these awards.
Furthermore, these initiatives should include more public support for reputable colleges and universities that educate a substantial percentage of black students such as historically black colleges, predominantly black institutions and community colleges.
Ultimately, more institutional support could help to buffer the need for tuition increases and allow institutions to increase allocations to scholarships that help to reduce college financial burden. In addition to supporting institutions that educate black students, support for equity-focused large-scale college affordability plans could also help to reduce many black students’ debt burden.
Also, while reputable institutions that serve a substantial percentage of black students should receive increased public support, support for for-profit institutions that employ predatory practices which saddle students with high levels of debt, and credentials that have little to no value in the labor force, should be eliminated. Black students comprise over a quarter of enrollment at for-profit institutions.
● Andre M. Perry , fellow in the Metropolitan Policy Program at the Brookings Institution
From bestowing the capacity to move to a better-resourced school district to expanding enrichment activities, wealth influences who gets admitted into college and the postsecondary options a person has. To effectively address the black student debt problem, one must tackle wealth inequalities — caused by racism — that colleges and universities exacerbate.
Higher education institutions shoulder low-wealth families with debt by issuing tuition and room and board vouchers to all students who can demonstrate less wealth than the sticker price of education. These should be capped at the price of in-state tuition at all public institutions. In addition, federal work-study policy should enable low-wealth students to earn while they learn through paid internships relevant to a student’s major.
State coordinating boards can administer new statewide matching systems that pair students to employers with approved positions. Accordingly, states and cities should not give away tax incentives to land employers. Rather, states must create a tax structure that reestablishes employers’ role in training the workforce through this matching intermediary.
Not only must colleges and universities demonstrate they are preparing students for civic society and the workforce, postsecondary institutions should demonstrate added value to students by proscribing debt. But that’s only one side of the debt coin. As a former dean and professor, I can testify that I never saw a tuition hike a president didn’t like.
University leaders cover everything from low enrollments, mismanagement of funds and overall inefficiencies with tuition increases, which are passed on to students. Closing wealth gaps won’t necessarily solve a primary source of the problem — underregulated pricing. Tuition subsidies must be capped at the price of in-state tuition for public-sector postsecondary institutions, cutting off the fuel to unfettered tuition hikes.
●Victoria Jackson, senior policy analyst for higher education at the Education Trust
Solutions to the black student debt crisis must not only address the needs of future students, but those with existing debt. To help future generations of black students complete college without crushing debt, resources must be invested in students who struggle the most to pay and colleges that serve the greatest shares of students of color.
What’s more, black completion rates can be improved by investing in under-resourced campuses that disproportionately serve low-income students and students of color, so they can provide better institutional supports to help those students graduate ready to step into a successful career.
At the same time, public policy must protect students from predatory institutions that misuse federal and state financial aid or defraud students by providing an education that isn’t worth their time and money and may leave them with debt and little to show for it and little chance of paying it back.
Affordability policies, including doubling the maximum Pell Grant and indexing it to inflation; removing the ban on Pell Grants for incarcerated students; increasing state funding for public colleges and need-based aid; and implementing a debt-free college promise up to the cost of attendance for low-income students are likewise needed and long overdue.
Debt cancellation would go a long way toward helping black borrowers with existing debt, though forgiveness plans should take racial wealth disparities into account and be graduated not only by income but by household wealth to ensure that the amount forgiven is sufficient to alleviate debt burdens for black borrowers. Student debt is not only a crisis for black borrowers but the whole country. Racist public policy created it, and we will need bold structural solutions to fix it.
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