When Carrie Bovill dreams of a life without student debt, everything changes.
She could buy a house, change jobs, get married, have a baby. She could stop stressing so much about money and think about passing on some wealth to her future kids and grandkids.
But Bovill, who is Black, owes $123,327 to the federal government for two degrees she earned from two historically Black colleges. It’s a sum that, despite those dreams, the 29-year-old can’t ever see paying off.
“It makes me feel like I will never be able to do anything, honestly,” Bovill says, pausing. “But work. And pay.”
For borrowers like Bovill, who works as a community coordinator at Coastal Carolina University in South Carolina, paying off student debt feels like a life sentence. That is especially the case for many Black borrowers, who data show are disproportionately affected by student loans.
Last year, 30% of Black households held student debt, a higher share than among white or Latino households. And while the typical student debt levels of those households have remained relatively flat in recent years, the median debt among Black households in 2019 hit $30,000, up from $21,270 just three years earlier. Black borrowers are also far more likely to experience the most devastating outcome of student borrowing: defaults. Even high-earning Black borrowers, for example, default at a rate that's seven times that of high-earning white borrowers.
The disparate experiences of white and Black borrowers have gained fresh attention recently, as policymakers consider options to forgive some debt of the country's roughly 43 million student loan borrowers. Momentum for widespread forgiveness has been growing for years, but the pandemic recession and a Democrat in the White House have brought the conversation a new level of prominence.
Racial justice has become a leading issue in the latest push for debt cancellation. Because Black students have to rely more on student debt to pay for their college education and then take much longer to pay it down after school, researchers have found that student debt is actually exacerbating the existing racial wealth gap among younger generations.
“Eliminating student loan debt is not going to close that wealth gap, by no means are we arguing that,” says Fenaba Addo, an associate professor of public policy at the University of North Carolina, who's studied wealth and student debt among Black families.
But what student debt cancellation can do, she says, is help Black borrowers who are struggling with their loans and keep the wealth gap from continuing to grow.
The problem is, $10,000 worth of cancellation — the amount that President Joe Biden has said he’d support — is not enough to make progress on that racial justice goal, experts tell Money. That’s one of reasons some Democratic lawmakers, like Rep. Ayanna Pressley and Sen. Elizabeth Warren, keep urging the White House to do more.
"That $10,000 isn’t going to do anything to dismantle the trajectory we’re on now," says Jalil Mustaffa Bishop, a vice-provost postdoctoral scholar and lecturer at the University of Pennsylvania’s Graduate School of Education. Recent research has shown that forgiving $75,000 would be needed to help roughly 80% of Black households with student loans by wiping out their debt and boosting their wealth.
The (unfulfilled) promise of higher education
Growing up in Kalamazoo, Michigan, Daryl Holman, Jr. knew he wanted to improve his opportunities for a career. Like a lot of 20- and 30-somethings, he heard the same message loud and clear from teachers, policymakers, society in general: College can give you those opportunities.
He attended Eastern Michigan University, where he earned both a bachelor’s degree in communications and a master’s degree in public administration. In both instances, most of his tuition was covered, first by the Kalamazoo Promise scholarship program and then by an assistantship in grad school. That left room and board (or in non-college lingo: rent and food) as his primary expenses. He borrowed to cover the costs.
“I took out loans because that’s what I needed to be able to stay in school and focus on my work,” he says.
College, the general knowledge goes, is the surest path to economic mobility and security. But that promise doesn’t pan out the same across different racial groups.
The structural racism that kept Black families from building wealth through homeownership and educational attainment means Black families today don't have the same resources to tap to pay for college. So they're forced to take on more debt in an attempt to improve their economic outcomes. And yet, even after attending college, Black workers earn less on average than white peers with the same level of education.
“It’s sort of a trap,” says Mark Huelsman, who’s worked on student debt issues for Demos and now is a policy fellow at the Student Borrower Protection Center.
When Holman took out loans as an 18-year-old, they were just a number on a piece of paper. He didn’t have any real concept behind what they would mean for his budget later on. He now owes about $97,000, which he hasn’t made any payments on yet.
At the end of 2019, when he started seriously considering repaying his debt, he realized there was no way he could afford to pay rent and still make meaningful payments on his debt. He was two years into launching his own design firm, living in New York City. No matter how he ran the numbers, his debt would just continue still to grow, because he couldn’t afford payments large enough to cover the monthly interest.
Out of desperation, he considered moving to other countries where he could live and not have to pay his loans. He even Googled faking his death to get out from under his debt.
Yes, he knows how outrageous that sounds, and to be clear, he did not actually attempt to do that. But it’s a story he shares to demonstrate just how unsolvable his debt felt.
Instead of researching wild ideas, he decided it would be more productive to get involved. He reached out to advocacy organizations like Student Debt Crisis and The Debt Collective and ended up helping design their websites.
"I think it’s time to admit that we did a wrong thing in charging people so much for wanting a better life," he says.
Growing evidence of the unequal burden of student debt
Research showing the student debt crisis among Black borrowers has been piling up in recent years. Here are some highlights:
In 2016, researchers with the Brookings Institute showed that the gap in student debt levels between white and Black borrowers triples in size just four years after graduation, as Black borrowers are unable to make payments large enough to keep interest from accruing. A report from the Center for American Progress then found that the average Black borrower who earned an associate or bachelor’s degree was unable to pay down any debt — not a single dollar of their principal amount — 12 years after enrolling. A later analysis supported that trend, showing that 20 years after graduation, a typical white borrower had, on average, paid off 94% of their balance, while the typical Black borrower had paid off just 5%.
Economist Judith Scott-Clayton added on with research showing that Black borrowers are far more likely to default than white borrowers, so much so that the rate of default is higher among Black graduates with debt than it is among white college dropouts. A default can have financial ripple effects for years, ruining a borrower's credit score and cutting off access to flexible repayment plans.
Yet for all the attention in recent years on the data around Black student debt, there’s not been as much of an effort by researchers to talk with Black borrowers about their actual experiences. That’s what Bishop, at the University of Pennsylvania, set out to do. He’s leading an upcoming study that consists of a survey of 1,300 Black borrowers, paired with 100 in-depth interviews.
“The thing that was clear to us when we were talking to Black borrowers across degree-levels and across income-levels was that student debt was consistently described as a burden,” he says.
In his interviews, borrowers were weighed down by their debt regardless of how much they were earning, he says. For younger borrowers, it was a burden that keeps them from buying a house. For older borrowers, including many parents, retirement no longer seemed feasible.
One of the most common arguments against widespread debt cancellation is that it would help people who are largely doing fine: college-educated professionals who, on average, earn more and face lower unemployment levels that those without a college degree.
But that reasoning, Bishop says, ignores the key difference between income and wealth. As a recent analysis published by the Brookings Institute shows, most student debt is held by households with little or no wealth in the form of home equity and savings in bank and retirement accounts.
How cancellation could change Black borrowers' lives
Nearly two-thirds of Black voters in a recent poll said they support “eliminating” student debt. The poll, from advocacy group Colors of Change, also found that three-quarters of respondents say they would save more for retirement if they weren’t paying off student debt. Nearly half would buy a home or move, and 40% say they would start a business.
Philtrina Farquharson, 26, is one of those borrowers who would buy a home if it weren’t for her debt. She earned her bachelor’s degree in public relations from St. John's University in New York City. When she struggled to find a job after graduation, she went back to school to earn a master’s in business administration. That’s not uncommon: a larger share of Black college students go on to pursue graduate education than students of other races.
Farquharson felt like student loans were the only way she could go to college, but she never thought through how she’d pay them off. Now, she’s embarrassed by how large her debt burden is, and she feels like she’ll be repaying them for the rest of her life.
“It makes me sad every time I think about it,” she says. If it weren't for student loans, she'd be debt-free, able to plan for her future and help out her parents, who borrowed a large sum to send her to college.
Debt was also the only way to pay for college for Bovill, the 29-year-old who says her life would change if she no longer had to worry about her student loans. She, too, felt she needed a graduate degree to try to stand out in the job market.
Cancelling $10,000 would be nice, she says. But for someone like her, who attended two historically Black (and historically underfunded) colleges, that amount of forgiveness won’t have much effect on her day-to-day life.
If she had the ear of lawmakers who are dueling over whether and how much debt should be canceled, Bovill would tell them this story: She was born into a poor family. Her parents were using drugs at the time, and she was a miracle baby who was never supposed to be able to learn at a typical pace.
“So me being able to go to college,” she says, “That was an American dream.”
It’s not fair for it to come at the expense of being financially stable, of being able to leave her children in a better position than she was in. One American dream, she says, shouldn’t come at the expense of others.
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