How the Student Debt Crisis Disproportionately Harms Black Borrowers

The large-scale accumulation of student debt began in the late 1970s, as states slashed funding for public universities and colleges, shifting the burden of cost from the government to individual students and their families. Since then, tuition rates at public institutions have skyrocketed, forcing students to take on debt to pursue their education—just as Black and brown students gained increased access to higher education. Rising tuition costs, combined with funding disparities that favor four-year public institutions and flagship campuses rather than the two-year schools and satellite campuses that serve a disproportionate share of low-income, Black, and Latinx students, have resulted in the student debt crisis being overwhelmingly carried on the backs of Black borrowers. 

According to research in a recent Roosevelt issue brief, “Student Debt Cancellation IS Progressive: Correcting Empirical and Conceptual Errors,” Black students pursuing higher education are more likely to take on debt and in higher amounts. Almost 51 percent of Black students take on student loans, compared to 40.2 percent of their white peers. Even within the same income bracket, Black borrowers hold more student debt than white borrowers. In fact, Black borrowers hold almost a quarter of all outstanding student debt, despite Black individuals making up only 13 percent of the US population.

The burden of student debt isn’t just a nuisance; it both results from and continues to drive wealth disparities between Black and white households. Because of the legacy of structural racism, Black students, even those in middle- to high-income brackets, do not benefit from the same generational wealth transfers that many white students do when paying for higher education. With fewer resources to help pay for college, Black borrowers are forced to rely on loans instead, diverting money that could have become savings or used to purchase property. Student debt thus becomes a self-perpetuating cycle, fueling and entrenching the racial inequities in generational wealth transfers that then lead to further racial inequities in student debt burdens.  

The policy solution to the student debt crisis is clear: President Biden should use his executive authority to cancel $50,000 of federal student loan debt per borrower. As Roosevelt’s recent issue brief shows, canceling $50,000 of student debt would most benefit borrowers with the fewest economic resources, who are also disproportionately Black and Latinx: For instance, the brief’s authors find that the poorest 10 percent of Black households would have an average of $17,366 in debt canceled and the poorest 10 percent of white households would have $11,090 canceled, while the wealthiest 10 percent of households (who are almost all white) would receive an average of $562 of debt cancellation.  

The Biden administration has committed to creating more equitable access to higher education for future generations, but words without action ring hollow. If President Biden is truly committed to racial justice and to creating an economy that leaves no one behind, he should seize this opportunity and act now to finally ease the long-lasting burden created by student debt.