Student Loan Crisis Falls Disproportionately on Black Women

When Stacey Abrams ran for governor of Georgia in 2018, her critics used the fact that she had over $100,000 in student loans to paint her as irresponsible and unfit. As a Black woman with student debt running for political office, Abrams, a celebrated lawyer, was not unlike many Black women who have achieved great career success via higher education. This rhetoric also betrayed a double standard, as many white male politicians and businessmen, including Donald Trump, use debt to grow their wealth.

Federal student loan payments restarted last month for approximately 45 million borrowers after a two-year moratorium that started during the COVID-19 pandemic. While the issue of student debt had already become a major campaign issue during the 2020 presidential campaign season, the suspension offered much-needed financial relief to borrowers in repayment contending with the economic precarity that accompanied the associated economic shutdown in the early months of the pandemic. It also laid bare the policy actions the government could take if it wanted to address the student debt crisis, thrusting proposals like debt cancellation to the forefront of the policy debate.

According to the American Association of University Women (AAUW), almost two-thirds of borrowers with outstanding student debt are women. Young adult women are more likely than men to enroll in and graduate from higher education institutions. They also leave college with higher student debt levels and take longer to pay off that debt. In 2017 AAUW calculated that close to $929 billion in national student loan debt is carried by women. In part, this is because of the gender wage gap, with female-dominated occupations paying lower wages and gender discrimination in the labor market. According to the Bureau of Labor Statistics, median wages in 2021 for female workers was 84.1% of median male earnings.

However, if college-educated women disproportionately bear the burden of student debt, Black women should be the face of this issue. In addition to the sexism they may face in the labor market, they also experience racism, which can contribute to greater social and economic inequities. Black borrowers carry higher levels of student debt than other borrowers, accumulate the largest loan balances, and have some of the highest rates of default and delinquency. Black adults encounter a racial wage gap with white adults, earning an average $801 per week relative to $1,018 earned by white workers, and confront racial discrimination in the labor market. Black parents are less likely to have college savings for their children and have less saved when they do.

In research I have conducted with colleagues, we show that racial disparities in education debt are rooted in racial wealth inequality. Family wealth is a particularly important resource that drives racial disparities in debt. In recent decades, college costs have increasingly shifted from government to families. For white young adults, familial wealth means a greater ability of parents to pay for college; conversely, lower familial wealth means more student debt accumulation. But Black young adults who enrolled in any type of postsecondary institutions were more likely to acquire student debt, regardless of the size of their parents’ wealth. We believe this is because in addition to have overall lower wealth levels, Black parents have fewer liquid assets such as stocks, bonds, and savings, which can be passed down more easily to the next generation.

It is estimated that if total student debt cancellation were enacted, eliminating Black-white debt disparities, the racial wealth gap among older millennials would decline by approximately 10.47%. Full student debt cancellation, however, is currently not on the table. President Biden’s plan to offer a maximum of $10,000 in debt cancellation for federal loans of non-Pell Grant recipients and $20,000 for Pell Grant recipients with individual incomes less than $125,000 and less than $250,000 for married couples was struck down by the Supreme Court earlier this year. Although the policy is race-neutral, Black borrowers would have been disproportionately helped relative to their population share. Bolder plans like Senator Bernie Sanders’ plan for total loan forgiveness of the outstanding $1.6 trillion debt and Senator Elizabeth Warren’s proposal to cancel $50,000 in debt of households with income less than $100,000, which would render 75% of borrowers debt-free, were not considered.

Many opponents to student debt cancellation opine that student loan borrowers are undeserving. And proposals to address the high debt burdens that receive the most attention focus on increasing the amount or quality of financial education borrowers and their families receive. Implicit in this proposal is that debt and wealth disparities are a result of individual choice and agency. The emphasis on financial education minimizes the importance of the structural conditions that led to the crisis and individualizes the problem by presenting a solution centered on the borrower and their lack of understanding or on their uninformed decision-making. When the focus shifts to solutions that are individualized, small or piecemeal efforts that garner attention (or are promoted by those who resist substantive change) help only a small number of borrowers.

In May 2019, when billionaire Robert Smith announced during his commencement speech at Morehouse College, a historically Black men’s elite college, a pledge to eliminate the student loan debt of the graduating class — an estimated $40 million — his gesture shone a bright light on racial disparities in student loan debt and undoubtedly helped those lucky young Black men to start their young adult lives without the student debt burden. I cannot help but consider how the racialized and gendered nature of student debt and its consequences continues to be ignored. Despite women going to school and completing their degrees at higher rates than men, their economic outcomes are much worse. For example, among millennials, Black women completed college (22.76%) at almost twice the rate of Black men (13.36%). Yet the median wealth of Black male millennial graduates ($8,105) was 2.5 times greater than that of Black female millennial graduates ($3,316).

Student debt continues to place a disproportionate burden on Black students and families and Black women, in particular. As our society grapples with the amount of debt that individuals accumulate to complete post-secondary degrees, it has also unveiled the intractability of racial wealth inequality within our society.