Since entering office in 2020, President Biden has helped to cancel over 12.5 billion in student loan debt for more than 640,000 borrowers with the administration’s push for student loan reform.
Back in March 2020, all payments and interest rates were paused, under the student loan moratorium. The initiative gave millions of Americans the ability to save after the Coronavirus pandemic sent the economy into sheer chaos. However, now, financial uncertainty could loom again for student loan borrowers as the moratorium will soon come to end in late August. Sadly, borrowers of color will suffer the most if the administration fails to issue widespread relief.
According to Brookings, after attending a four-year college, Black students will graduate owing $52,726, compared to $28,006 for the average white college graduate. Federal interest rates could exacerbate the issue if students are forced to delay payments due to insufficient income. Before the moratorium went into effect, the federal student loan interest rate for undergraduates was 4.99% for the 2022-23 school year. Federal rates for unsubsidized graduates were even higher, standing at an alarming 6.54 percent.
In April 2020, Biden proposed forgiving all federal student loan debt for students who attended HBCUs in an OP-ED for Medium. Under the initiative, the president propositioned the idea of canceling federal student debt for borrowers earning “up to $125,000.”
“The federal government would pay the monthly payment in lieu of the borrower until the forgivable portion of the loan was paid off,” Biden added. According to the plan, the benefit would have also applied to Minority Serving Institutions like Tuskegee University but the administration has yet to follow through on its proposed plan.
Black organizations and lawmakers demand debt relief
A number of organizations have been calling on the administration to help Black Borrowers amid the growing crisis. On Twitter, The Student Debt Crisis Center urged Biden to create an effective plan.
“Black students are more likely to take out federal student loans. With debt becoming an increasingly larger issue, it’s time President Biden did something about it. @POTUS can we count on you? The group tweeted.
Following the White House’s proposition to cancel up to $10,000 for all student loan borrowers saddled with debt, Wisdom Cole, the NAACP’s national director of the association’s youth and college division, called the move “a slap in the face.”
“That won’t do much to reduce the racial wealth gap,” Cole continued. “Through generations, Black people have been drawing in debt. We’re concerned that the white house just doesn’t get the devastating impact of student loan debt on Black people.”
Cole and Democratic lawmakers like Chuck Schumer and Elizabeth Warren have been urging the president to wipe out nearly $50,000 worth of debt for Black borrowers, who make up nearly 22% of student loan debt, respectively. Canceling that amount would provide more than 70% of relief for both groups.
Back in May, a coalition of 529 organizations wrote a letter to Biden that argued canceling student loan debt among borrowers of color could potentially increase the net wealth of Black households but who knows when that day will come
Biden has issued mass debt relief in the past
So far, Biden has extended mass student loan debt cancellation to students with disabilities and students whose campuses were closed down due to the pandemic. Additionally, in February, the Department of Education announced that nearly 16,000 borrowers who were misled by their schools would have their student loans completely cleared. The new measure created a whopping $415 million in relief for affected borrowers.
The Department of Education found that students who attended four for-profit colleges were misled while enrolling in programs and while taking out student loans to cover college fees. DeVry University was named in the investigation with nearly 1,800 borrowers expected to have their student loans discharged from the institution. According to MarketWatch, the agency’s data revealed that “between 2008 and 2015 DeVry advertised a 90 percent job placement rate to potential students, when the school’s actual job placement rate was 58 percent.”
Westwood College, ITT Technical Institute, and the Minnesota School of Business were also named in the startling investigation. Students who attended all three colleges claimed they were misled with false information and that they were victims of fraud during their academic tenure with the aforementioned institutions.
President Biden can mandate mass debt relief for millions of Black students, but will he finally deliver on his promise come August? We’ll just have to wait and see.
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