The student loan debt crisis has crippled nearly 43.4 million borrowers across the country. According to the Education Data Initiative, the average public university student borrows $30,030 to obtain a bachelor’s degree. Meanwhile, those who attend private universities borrow $43,900 on average.
Over the last two years, American students have been given a reprieve from paying off their exorbitant debt thanks to the pandemic-induced student loan moratorium that was enacted in March of 2020. However, that could come to an end on Aug. 31 if no federal action is taken, leaving Americans with student loan debt struggling to make ends meet as inflation continues to soar amid looming fears of a potential recession.
Data shows that Black and Latino student loan borrowers will be hit hardest if the Biden Administration fails to pass legislation that would provide immediate debt relief for individuals drowning in student loans.
Before the moratorium was implemented, some borrowers of color saw their loan balances continue to climb despite years of making monthly payments faithfully. New data published by the Center for Responsible Lending notes that “nearly 75% of Black borrowers and 63% of Latino borrowers have seen their student loan balances grow rather than shrink, compared to 51% of white borrowers.”
Black and Latino borrowers graduate owing more than white students
Four years after graduation, 48% of Black students owe an average of 12.5% more than they borrowed, and 29% face monthly student loan payments of $350 or more, making it hard to save for a home or future investments.
Consumer financial services company Bankrate notes that Latino borrowers often owe nearly $38,000 post-graduation. Black college students can graduate owing an average of $52,726 compared to white college graduates, who owe closer to $28,006 on average, according to the Brookings Institution.
Democratic lawmakers like Sens. Chuck Schumer and Elizabeth Warren have been urging the president to wipe out nearly $50,000 worth of debt for Black and Latino borrowers, who make up nearly 22% and 28% of student loan debt, respectively. Canceling that amount provides more than 70% of relief for both groups.
On May 27, a coalition of 529 organizations wrote a letter to Joe Biden and Vice President Kamala Harris demanding the administration authorize student loan forgiveness through executive order.
“Black borrowers report that their student loan debt often feels like a life sentence, even if they use relief programs like Income-Driven Repayment because they watch the amount owed balloon over time,” the letter read. “Student debt cancellation has the potential to increase the net wealth of Black households and could even help reduce the racial wealth gap. We call on you to deliver on the promise of the Biden-Harris Racial Economic Equity plan by canceling federal student debt by executive action immediately.”