Biden faces pressure to help Black borrowers with heavy student debt

President Biden is reported to be closing in on a plan to cancel $10,000 in federal student debt per borrower, but some advocates are concerned about the impact it will have on Black borrowers, who data shows are likely to owe more to cover the costs of education.

Many Democrats at the helm of student loan forgiveness efforts have promoted broad-based cancellation as a way to advance racial equity, often citing data showing the disproportionate burden faced by Black borrowers, especially women.

But, as more reports surface of Biden’s plans narrowing in on a decision on some student debt forgiveness, advocates are dialing up the pressure.

“The impact that $10,000 would have would be so minor, that it wouldn’t really address the real issue for Black borrowers,” said Wisdom Cole, national director of the NAACP Youth & College Division.  

Data from The Institute for College Access and Success (TICAS) found that Black graduates, who advocates acknowledge often have less access to intergenerational wealth due to historical racial discrimination, were more likely than other racial groups in 2016 to take on student debt, and more of it. 

In the report, which cites figures from the Department of Education, 80 percent of Black bachelor’s degree recipients also were found to have graduated with an average debt of $34,000 at the time, more than their white, Hispanic, Latino, and Asian peers. 

The data also adds to research from the Brookings Institution finding Black graduates are more likely than their white peers to default, and less likely to own a home than white Americans without a high school diploma.

A number of advocates and lawmakers say the White House should go as far as possible in cancellation to address the disproportionate amount of federal student debt carried by Black borrowers, pushing for total cancellation of the debt.

The calls build upon a growing push by Democratic lawmakers calling for Biden to support more significant cancellation, including approving as high as $50,000 in loan forgiveness.

“People are drowning in debt, especially Black borrowers, 10 years after taking out these loans. Two thirds of black borrowers hold more than they did when they started, more. Twenty years out they owe 95 percent of the loan. So, it’s also a racial equity issue here,” Sen. Raphael Warnock (D-Ga.) told reporters last month after a meeting with Biden on the matter.

The campaign adds pressure to Biden ahead of the pivotal midterm races in November, amid ongoing attacks from Republicans over the student loans push they say is unfair, and as some experts warn of the effects limited debt action could have on economic efforts to promote racial equity in the long run.

Despite calls to go higher, reports that have surfaced in recent weeks signal the White House is most seriously looking at providing $10,000 in cancellation for some borrowers, in keeping with a previous campaign pledge by the president.

A recent version of the plan reported on by The Washington Post involved income caps for eligibility, restricting cancellation to individuals that brought in under $150,000 in 2021, and $300,000 for couples.

With those restrictions in place, student loan expert Mary Jo Terry said the intent appears to be aimed at helping “lower to middle class individuals in this scenario, which is going to help the racial divide.”

Sandy Baum, a nonresident senior fellow at the Urban Institute’s Center on Education Data and Policy, also said last month that the proposed cancellation could make a difference for borrowers who “hold just a little bit of debt” and are struggling financially.

“About a third of the people who have student debt, hold only 4 percent of the debt, so, in other words, a third of borrowers owe less than $10,000 that all together as up to 4 percent of all the outstanding debt,” Baum said. “But at the other end of the spectrum, you have about 7 percent of borrowers who owe more than $100,000.” 

Some advocates have pushed back against applying means testing for eligibility, given fluctuations in income and economic instability during the pandemic, among other reasons.

Frederick Bell Jr., organizer at the Debt Collective, called the reported plan to attach income caps to debt forgiveness “​​a very slippery slope,” adding he often views means-testing as a way to “silence the right.”

Cole similarly expressed concerns about the reported income restrictions, arguing the impact it could have on shutting out Black women, as he said more are “continuing to seek higher education and degrees to support their families, and to support the community.” 

“Income is not the same as wealth, and it’s very important that the administration consider the debt-to-income ratio, when thinking about a solution that is going to be equitable for all,” Cole said, adding “the way your dollar may stretch doesn’t look the same, from the Black community to the white community.”