President Joe Biden’s student loan debt forgiveness program has approved more than 16 million people as the legal battles wage on. California, Florida, New York and Texas had the highest number of fully approved program applicants. Even with the program on hold for now, it still has the potential to start closing the racial wealth gap.
The Breakdown You Need To Know:
The U.S. Department of Education stated that more than 60% of the 26 million people who applied to their program have had their loans sent to servicers for discharge. Nearly 90% of the benefits of the relief going to out-of-school borrowers would go to those earning less than $75,000 per year.
Applications forgiving $10,000 in student loans per borrower making less than $125,000 have now been closed due to the aforementioned nationwide injunction. CultureBanx reported that herein lies the problem, about 19% of households that have total incomes below $125,000 have student loan debt, according to the Urban Institute. The Roosevelt Institute brief shows that canceling up to $50,000 of student loan debt per borrower would immediately increase the wealth of Black Americans by 40%.
“These borrowers could be benefitting from the Administration’s program right now were it not for lawsuits brought by elected officials and special interests,” according to a White House fact sheet.
Not to mention that four years after graduation, the average Black borrower owes $53,000, while the average white borrower owes $28,000, according to the Brookings Institute, meaning they are unable to focus on other financial goals like buying a home, paying off credit card debt, and saving for retirement. Eliminating this debt will start to narrow the racial wealth gap for young families, with 86.6% of Black students taking out federal loans to attend four-year colleges.
“The average Black borrower has $53,000 in student loan debt four years after graduation, nearly twice the amount as their white counterparts,” said NAACP President Derrick Johnson. Canceling $10,000 per borrower would cost around $321 billion and completely forgive the loans of about one-third of student loan borrowers. The Supreme Court justices will hear arguments over the student loan debt forgiveness program on February 28.