By Maggie Thompson, Executive Director at Generation Progress
We all know student debt is a problem. The 43 million Americans who have student loan debt know it, their family and friends know it, and the millions more who feel the weight of $1.3 trillion in student loan debt on the economy know it. But what most people don’t know is that this debt disproportionately impacts communities of color, and middle-class African-American and Latino families in particular. And for Millennials – who, together, comprise the most diverse generation in American history, and whose economic recovery and stability is inextricably tied to student loan debt – this trend is particularly distressing.
At Generation Progress we teamed up with the Washington Center for Equitable Growth to publish the second installment of Mapping Student Debt, the interactive mapping tool that shows us how student debt and delinquency is impacting communities down to the zip code-level.
These maps offer a compelling visual of how structural racism has manifested itself in the student debt market. Zip codes with higher shares of African Americans and Latinos suffer disproportionately from higher rates of student loan delinquency, regardless of income level. Further, the data show that it is middle-class communities of color, not low-income, who are impacted the most from student debt delinquency.
The Millennial generation, as diverse and engaged as they have become, are also a generation that has struggled to keep pace with the rest of the country’s economic recovery. A greater share of young people live in poverty than members of previous generations at the same age. Our current system of debt-financed education is clearly stifling the promise of higher education as means to gird against poverty.
For young people of color, the path to a degree today is more difficult than ever. The odds of a student of color completing college versus a white student remain stark. What’s more, young people of color are less likely to attend more selective institutions, where the benefits of a college degree are the greatest. And in the labor market, African Americans and Latinos not only suffer from higher unemployment rates and lower wages, but are also are less likely to receive a job offer in the first place.
These imbalances amount to disparities in wealth between communities of color and their white counterparts, which intensify the student debt crisis. In the event of some sudden misfortune, it goes without saying that financial assets and college degrees offer a brace against student loan delinquency. Without those safety nets, a freefall into financial hardship is all but predetermined. Young people, and young people of color especially, are too often trapped in this vortex of inequity.
But while the federal government has taken to sitting on the sidelines to address student debt, state and local leaders have begun to fill the void left by congressional inaction. Local- and state-based solutions can provide significant relief for the tens of millions of Americans drowning in student debt today, and the millions more who will suffer tomorrow.
Enrolling borrowers in loan forgiveness and income-driven repayment programs and educating borrowers of their eligibility for such programs is imperative, and relatively simple. The City Council in Cincinnati, Ohio and the County Board in Dane County, Wisconsin have both passed such resolutions, and more bodies should follow suit. Ending credit checks on employment and harsh penalties for borrowers in default would undo counterproductive policies preventing Americans from paying off their debts. This would especially benefit borrowers of color.
Finally, ensuring vigorous oversight of predatory for-profit colleges and making free or debt-free higher education options the new norm is vital for leveling the playing field. States like Tennessee and Oregon, and cities like Chicago and Milwaukee, have all passed free community college programs. President Obama made clear his commitment to the cause during his State of the Union address, but states and cities have both the upper hand and the advantage of precedent.
The intersection of deep-rooted racial disparities and a ballooning student debt crisis is where we find ourselves now. The fact that, among African American and Latino communities, the middle-class is the most impacted by the student debt crisis suggests that structural racism—not poverty—is driving these gaps between communities. Any solution that is serious about tackling student debt—whether from the federal, state, or local level—must recognize the disproportionate impact of this debt on communities of color.
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