Black borrowers compare student loan debt to ‘Jim Crow’ claiming it worsens racial inequalities, new study finds

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By Nicquel Terry Ellis, CNN

(CNN) – Black borrowers say policymakers have ignored racial and economic evidence of student debt inequality, with majority insisting that canceling all student debt is the best solution to the crisis , according to a new report released Wednesday by The Education Trust.

The report, which focuses on the perspectives and life experiences of nearly 1,300 black borrowers, likened the disparities to “Jim Crow.” Many respondents believed that student loans were not put in place to give black Americans financial freedom and that they disrupt their quality of life and mental health, the results show.

Some of the main findings of the study, “Jim Crow Debt, How Black Borrowers Experience Student Loans,” were that most black borrowers don’t think student loans are “good debt.” They believe that income-driven repayment plans are a life sentence, that limiting student loan debt forgiveness hurts black borrowers the most, and that the majority would rather the government cancel their loans than offer. lower interest rates or free tuition.

Jonathan CW Davis, senior research associate at The Education Trust and co-author of the report, said the aim of the study was to draw attention to how anti-black racism, divestment in the he higher education and the inequitable distribution of wealth in the country has placed a burden on black borrowers.

Executives at The Education Trust say policymakers need to be held accountable.

“This is an attempt for us to help shift the conversation away from the individual decision-making of the borrowers themselves and place the blame where it should be, i.e. with the systems and flawed policies that led to this crisis, ”Davis told CNN.

The report found that the idea that student loan debt provides a route to earning degrees that lead to higher incomes, greater wealth, and social mobility is often not the case for black borrowers.

“The presentation of student loans as ‘good debt’ ignores the experiences of black borrowers, who have less family wealth than their white counterparts and often have no choice but to take out student loans to pay for their education and the associated tuition fees. Says the report.

According to the report, the median annual income of white men with a bachelor’s degree was $ 62,000, compared to $ 47,600 for black men with a bachelor’s degree in 2018. The median annual income of white women with a bachelor’s degree was $ 50,000, compared to $ 42,100 for black women with a similar degree. .

In the study, 61% of respondents disagreed with the idea that student loans increased a black borrower’s ability to build wealth. And 58% of respondents disagreed that student loans contribute to racial equality for black student borrowers.

The report also found that income-driven repayment plans and limiting student loan debt forgiveness based on income and amount borrowed were not helpful for most black borrowers.

Income-driven repayment plans, for example, created lower monthly payments but growing student balances for black borrowers because the payments didn’t cover interest and principal.

“They have described their growing balances under IDR plans as ‘ankle chains’ or ‘like Jim Crow’ where debt guarantees they will never have complete freedom,” the report said.

Many respondents enrolled in income-driven repayment plans said they still struggled to afford a savings account, health care, childcare and food. Black borrowers surveyed had an average monthly student loan payment of $ 502.

Additionally, the study finds that many loan cancellation policy proposals disproportionately exclude black borrowers. For example, many would not qualify for a proposal capping student debt forgiveness at $ 10,000 or even $ 50,000.

Black borrowers are more likely to have balances over $ 50,000, more likely to take on graduate debt in hopes that more degrees will help them fight discrimination in employment, report says. and less likely to amass wealth.

Biden has so far written off $ 9.5 billion in student loan debt for about 563,000 borrowers, the US Department of Education said in August. These borrowers included victims of collegiate for-profit fraud and people with permanent disabilities. Also in August, the Biden administration announced it was extending the freeze on federal student loan payments until January 2022 under pressure from lawmakers and advocates.

However, Biden stopped before the blanket cancellation of student debt.

The report found that 80% of respondents would like the government to write off all student loan debts.

Victoria Jackson, deputy director of higher education policy at The Education Trust, said the organization supports the cancellation of student loans of at least $ 50,000.

Jackson said The Education Trust supports other solutions such as the doubling of the Pell Grant, federal and state partnerships that offset tuition fees for two- and four-year public colleges, and the America’s College Promise Act which makes community colleges free.

“There are over 40 million people in debt and these efforts (of the Biden administration) do not go far enough to deal with the financial pressure these people are under, especially for black borrowers who we know. bear the brunt of this crisis. “Jackson said.” What these actions are showing us is that cancellation is a possibility, it is something that can be done. “

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