In the United States today, over 45 million people collectively owe $1.73 trillion in student debt, with the burden of this debt disproportionately falling on students of color. The persistent and compounding harmful consequences of student debt—particularly for Black and brown borrowers—have led politicians, scholars, and activists to call for large-scale cancellation of federal student debt.
Despite some claims to the contrary, the empirical evidence on student debt cancellation suggests it is a progressive policy with the potential to address long-standing racial wealth inequities. A recently published Roosevelt Institute report found that broad-based federal student debt cancellation would most benefit those with the fewest economic resources, particularly Black and brown borrowers, and would operate as an effective tool to grow the Black middle-class. Using data from the 2019 Survey of Consumer Finance to analyze models of student debt cancellation in the contexts of both wealth and race, the report shows:
- Student debt cancellation will have a greater impact on less wealthy borrowers.
- Student debt cancellation will have a greater impact on Black and Latinx borrowers than on white borrowers.
- A substantial student debt cancellation plan could be a powerful tool to grow the Black middle class and address the racial wealth gap.