Jhe student debt crisis has crippled nearly 43.4 million borrowers across the country. According to the Education Data Initiative, the average student at a public university borrows $30,030 to earn a bachelor’s degree. Meanwhile, those attending private universities borrow an average of $43,900.
For the past two years, American students have been granted a reprieve from paying off their exorbitant debt thanks to the pandemic-induced student loan moratorium that was signed into law in March 2020. However, this could end on August 31 if no one Federal action is taken, leaving Americans with student loan debt struggling to make ends meet as inflation continues to soar amid looming fears of a possible recession.
Data shows that black and Latino student borrowers will be hardest hit if the Biden administration fails to pass legislation that would provide immediate debt relief to people drowning in student loans.
Before the moratorium was put in place, some borrowers of color were seeing their loan balances continue to climb despite years of steady monthly payments. New data released by the Center for Responsible Lending notes that “nearly 75% of black borrowers and 63% of Latino borrowers saw their student loan balances increase rather than decrease, compared to 51% of white borrowers.”
Black and Latino borrowers graduate due more than white students
Four years after graduation, 48% of black students owe an average of 12.5% more than they borrowed, and 29% face monthly repayments of $350 or more, making difficult to save for a home or future investments.
Consumer financial services firm Bankrate notes that Latino borrowers often owe nearly $38,000 after graduation. According to the Brookings Institution, black students can graduate owing an average of $52,726 compared to white graduates, who owe more than $28,006 on average.
Democratic lawmakers like Sens. Chuck Schumer and Elizabeth Warren urged the president to write off nearly $50,000 in debt for black and Latino borrowers, who account for nearly 22% and 28% of student loan debt, respectively. Canceling this amount provides over 70% relief for both groups.
On May 27, a coalition of 529 organizations wrote a letter to Joe Biden and Vice President Kamala Harris asking the administration to allow student loan forgiveness by executive order.
“Black borrowers report that their student loan debt often feels like a life sentence, even though they use relief programs like income-based repayment, as they see the amount owed swell over time,” reads -on in the letter. “Student debt forgiveness has the potential to increase the net worth of Black households and could even help close the racial wealth gap. We call on you to fulfill the promise of the Biden-Harris Racial Economic Equity Plan by immediately canceling federal student debt through executive action.
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