Nearly $3 Billion Of Student Loans Cancelled, Racial Wealth Gap Could Be Closing

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President Biden continued his campaign promise to gradually cancel student loans and has already canceled debt totaling $ 2.8 billion, with more plans on the horizon. Education is one area where black Americans suffer the most because of institutionalized racism – especially when it comes to student loans. Young black adults take on 85% more educational debt than their white counterparts, and that disparity increases 7% each year after borrowers leave school, according to a recent study in the journal Sociology of Race and Ethnicity. As the student loan debt burden worsens, wealth inequality continues to be the debt gap among black college students, so eliminating that debt could finally move the needle towards closing the racial wealth gap.

The Breakdown You Need To Know: CultureBanx points out a brief overview of what happened: As early as March, Biden cut 72,000 loans worth $ 1 billion. Since then, he has canceled $ 1.3 billion in loans to 41,000 borrowers with total and permanent disabilities, for a total of $ 2.3 billion. Just last month in June, Biden cut another $ 500 million in student loans, again under the borrower defense rule for student loan repayments, with the current total number of canceled loans standing at $ 2.8 billion.

Biden’s plan to cancel student loans is part of a broader strategy to make higher education more affordable and less financially burdensome. It’s important to note, however, that while $ 3 billion is a big headline number, that number represents about 0.1% of the outstanding $ 1.7 trillion in student loans.

For those who have attended public colleges or traditionally black colleges and universities (HBCUs) and are making less than $ 125,000 a year, student loan debt cancellation is a big win as it’s no secret that college costs are faster are rising than American wages and inflation, 8x faster to be precise.

School dazed and confused: Students of color typically accumulate hundreds of thousands of dollars in student loan debt, which means they can’t 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, as 86.6% of black students take out federal loans to attend four-year colleges, compared with just 59.9% of white students.

Additionally, the amount of loans that are 90 days or more past due has not changed much since 2012, showing that the financial burden is as high as the unemployment rate, which is now 9.6% for African Americans. HBCU students, in particular, are more likely to be insolvent over a 12-year period than African Americans attending other four-year colleges and universities, according to the Wall Street Journal.

Remember, whether or not tax dollars should be used to repay student loans is at the center of the federal loan cancellation debate. The exact manner in which it will terminate is still unclear, and since loan approval may not be complete, it may not apply to all student loans taken out by individuals.

source https://collegeeducationnewsllc.com/nearly-3-billion-of-student-loans-cancelled-racial-wealth-gap-could-be-closing/