As of 2022, approximately 46 million Americans owe a total of nearly $1.75 trillion in U.S. student loan debt, according to federal student aid data. Women carry about two-thirds of that debt. Amid ongoing health and economic emergencies, the U.S. Department of Education issued a federal pause on student loan debt repayments, which will remain in effect through August 31, 2022. The repayment hiatus opened up opportunities for millions of Americans, particularly Black women, who hold “more student debt than any other group — with an average of $38,800 in federal undergraduate loans.”
Prior to this pause, education debt repayments totaled about $400 per month for the average person, and the lift of this burden over the past two years helped people to realize goals and priorities they had put off indefinitely. The Washington Post interviewed a handfull of Black college-educated women in 2022 to understand what the student loan repayment pause meant for them, and the interviewees explained that they have been able to save and invest more, open up retirement accounts, catch up on other bills or even purchase homes.
Now, the thought of having to restart repayments again is bringing stress back into the lives of many borrowers. Lisa Jackson from Odenton, MD, one of the women interviewed in the Washington Post article, was able to use the extra money to pay down tax debt and purchase flights to check on her elderly parents. “I rejoiced, yet the debt is still looming in the background, like a monster that’s being kept at bay for now,” Jackson said regarding the impending payments.
Canceling Student Loans Would Narrow the Racial Wealth Gap
A 2019 study found that canceling $50,000 of federal student loans per individual would eliminate all student loan debt for 93% of Black low-income households that hold student debt. This would effectively serve to narrow the racial wealth gap. A Brookings Research study found that the net worth of white family households in the U.S. is ten times greater than Black family households, and that is largely attributed to the disproportionate amount of debt that Black graduates take on. A 2018 study published in the American Sociological Association’s journal Sociology of Race and Ethnicity found that young Black adults hold “85% more education debt than their white counterparts — and that disparity compounds by 7% each year after the borrowers leave school, because African-Americans face unique repayment challenges.”
Robert F. Smith, the Founder, Chairman and CEO of Vista Equity Partners, is investing in solutions to create equity in education and on ramps to a better future in the American workplace. In 2019, he made headlines for paying off the student loan debt of Morehouse College’s graduating class so they could focus on investing in their future and paying the gift forward within their communities. Smith also helped launch the nonprofit Student Freedom Initiative in 2020, which aims to help free students from debt while creating an infrastructure of opportunity from school to internship to professional career.
Other ways Smith and a coalition of businesses are helping to close the racial wealth gap in the U.S. are outlined in the Southern Communities Initiative, which is targeting inequity in healthcare, housing and banking as well as education and technology.