What Canceling Student Debt Would Do for the Racial Wealth Gap

In his victory speech, Joe Biden made a promise to America’s Black community: “You’ve always had my back, and I’ll have yours.” {snip}

One of the quickest ways that President Biden could begin to fulfill his promise to Black America, without needing to wait for Congress, is to cancel all federal student debt through executive action.

The president has recognized the problem that student debt poses. His administration quickly extended former President Donald Trump’s pause on federal student loan interest and payments, and Mr. Biden has expressed support for a minimum of $10,000 per person in “immediate” student debt cancellation in addition to campaign promises of more substantial relief.

But only a full cancellation would help all borrowers who struggle with educational debt. It would also begin to address the added burden that a long history of discriminatory policy places on borrowers of color, and Black borrowers in particular.

The 20th-century government programs that built and supported the white middle class were explicitly exclusionary, and that helped create a wealth gap in which the median white household has eight times the assets of the median Black family. Less wealth means that Black students, particularly Black women, take on more debt when they attempt to go to school.

The problem is compounded by employment and wage discrimination. Black families earn just 80 percent of what white families with the same education level do, and Black women earn just 63 cents on every dollar paid to white men with the same degree. So Black people need to obtain more credentials to obtain incomes equal to white people’s, and additional education costs them more because of the extra debt and accruing interest that lead many to struggle with repayment.

The president has the ability to drastically change the lives of more than 43 million borrowers and their families. Decades ago, Congress gave the Education Department the authority to cancel federal student loan debt administratively. {snip}

Senators Chuck Schumer and Elizabeth Warren, seemingly recognizing the inadequacy of the $10,000 proposal they originally put forth, have urged Mr. Biden to use his authority to cancel at least $50,000 in federal student debt via executive action. {snip}

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But a full cancellation would provide the best outcome of all, and would protect young Black people who sought to use education as a tool for social mobility rather than punish them for pursuing the very credentials they need just to obtain the income of less-educated white people. Because Black graduates have more debt than their classmates, a full cancellation would even the playing field instead of leaving more Black graduates mired in the educational debt trap.

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