The Racial Impact and Rhetoric of Student Loan Forgiveness - by Peter Larsen

Submitted by Vinay Harpalani on Sun, 12/11/2022 - 19:54

On August 24, 2022, President Biden announced a three-part strategy to address the U.S. student debt crisis. [1] First, cancellation of up to $10,000 for borrowers who earned less than $125,000 per year, with an additional $10,000 available for Pell grantees. Second, providing relief to borrowers by fixing the well-known problems with the Public Service Loan Forgiveness (PSLF) program and cutting undergraduate loan monthly payments. Third, working to control increasing costs of higher education going forward. Perhaps predictably, the major focus of attention in media and public opinion has centered around debt cancellation, and all but ignored the latter two parts of Biden’s strategy.

Outrage from conservatives was swift and broad. Senator Ted Cruz (R-TX) claimed that the working class might “get off the bong” and vote for the Democrats in the 2022 midterm elections. [2] A group of Republican Congresspersons voiced concern that Biden’s limited student loan cancellation would depress military recruitment, citing the military’s coverage of educational costs for some armed service members as a chief recruitment incentive. [3] Even more conservative pundits and politicians argued against student debt cancellation on general principle, with arguments ranging from the offense debt forgiveness causes to those who had already paid off their student loans, [4] to even more outlandish claims. [5] While some, like the ACLU exerted pressure on Biden prior to his announcement, arguing student debt cancellation is a racial justice issue, [6] conservative extremists called debt cancellation racism against white people. [7] Meanwhile, the Biden White House was mostly concerned with pointing out the perceived hypocrisy with many of the student debt cancellation critics having recently significantly benefitted from the federal government’s financial relief during the pandemic. [8]

So, what is the truth regarding race and student debt cancellation? By the numbers, federally held student loans makeup roughly 92% of student loan debt, or $1.6 trillion, spread out over 43 million loan holders. [9] This is truly a major financial crisis for the U.S. Who holds those loans? “In 2015–16, the percentage of full-time, full-year undergraduate students who received loans from any source also varied by racial/ethnic group. A higher percentage of Black students (71 percent) received loans than students who were White (56 percent), of Two or more races (54 percent), Pacific Islander (53 percent), Hispanic (50 percent), American Indian/Alaska Native (38 percent), and Asian (31 percent)…. With respect to Federal Pell Grants, Asian students received a higher average annual amount of aid ($5,030) than did Hispanic ($4,860) and White ($4,610) students. Students who were Black ($4,900), Hispanic, and of Two or more races ($4,830) also received higher average annual amounts of Pell Grant aid than did White students.” [10]

What of the racialized rhetoric from the right? Research has shown conservatives perceive a greater racial correlation with marijuana usage than liberals. [11] The actual data, however, shows that “in 2018 the lifetime prevalence of cannabis use was lower for Black (45.3%) than White (53.6%) adults aged 18 years or older, but Black individuals were 3.64 times more likely to be arrested for cannabis possession.” [12] In terms of military service, “In 2004, 36% of active duty military were black, Hispanic, Asian or some other racial or ethnic group. Black service members made up about half of all racial and ethnic minorities at that time. By 2017, the share of active duty military who were non-Hispanic white had fallen, while racial and ethnic minorities made up 43% – and within that group, blacks dropped from 51% in 2004 to 39% in 2017 just as the share of Hispanics rose from 25% to 36%.” [13] Interestingly, one of the greatest racial disparities around President Biden’s announced plan actually has to do with the PSLF program. While “[o]ne-third of Americans support PSLF, “Black or African Americans are more likely to support PSLF than any other race,” and “White or Caucasian Americans report the least support for PSLF.” [14]

In many ways, there is a great benefit to Black people in student loan forgiveness. At the same time, the benefit to the Black community is perhaps overstated. The larger issue at play is the conflation of race and socioeconomic status. The relationship between the two is complex, and well documented, but poorly understood. Current census statistical research shows that “race and ethnicity in terms of stratification often determine a person's socioeconomic status.” [15] Many of the benefits of student debt cancellation are more impactful along socioeconomic lines than racial lines. From the Brookings Institute, “we know that white families have about eight times the amount of wealth as Black families, and that really comes out of the wash in terms of who repays student loans, what kind of time period, as well as default rates. And we know that Black borrowers take much longer time to cancel or to eliminate their loans, to pay down their loans, and also their default rates are higher.” [16]

Still, it seems that the focus of conservative groups attempting to derail Biden’s student debt cancellation will remain myopic about the perceived racial benefits of debt forgiveness. One of the legal challenges to the plan is from the Brown County Taxpayers Association, which claims that debt cancellation “violates federal law by intentionally seeking to narrow the racial wealth gap and help Black borrowers.” [17] (The group’s emergency application for writ of injunction pending appeal was recently rejected by the Associate Justice Amy Coney Barrett, who serves as the Circuit Justice for the lawsuit, as well as the preceding federal judge and appellate judge panel. [18]) It remains incumbent on academics to continue correcting the record and drawing necessary fine distinctions relating to racially based misinformation and disinformation around student debt cancellation as these lawsuits continue to wend their way through the courts and remain a topic of discussion in the popular media.

Peter Larsen is a practicing civil rights attorney and a doctoral candidate and graduate student instructor at the University of Iowa.

[1] White House, FACT SHEET: President Biden Announces Student Loan Relief for Borrowers Who Need It Most, (August 24, 2022), https://www.whitehouse.gov/briefing-room/statements-releases/2022/08/24…

[2] Alia Slisco, Ted Cruz Slams 'Slacker Baristas' in Rant Against Student Loan Forgiveness, Newsweek (August 26, 2022), https://www.newsweek.com/ted-cruz-slams-slacker-baristas-rant-against-s…

[3] Ellen Mitchell, GOP lawmakers worry Biden loan forgiveness could hurt military recruiting, The Hill, (September 19, 2022), https://thehill.com/policy/defense/3650617-gop-lawmakers-worry-biden-lo…

[4] Olafimihan Oshin, GOP senator says Biden’s student loan forgiveness plan ‘monumentally unfair’, The Hill, (August 28, 2022), https://thehill.com/homenews/3618516-gop-senator-says-bidens-student-lo…

[5] Michael Mechanic, The Republicans Are Lying (Quite Pathetically) About Student Debt Forgiveness, Mother Jones, (August 25, 2022), https://www.motherjones.com/mojo-wire/2022/08/biden-student-debt-relief…

[6] ACLU, Student Debt is a Racial Justice Issue. Here’s What President Biden Can Do to Help, ACLU, (March 30, 2021), https://www.aclu.org/news/racial-justice/student-debt-is-a-racial-justi…

[7] Zach Linly, Student Debt Relief Discriminates Against White People, Newsone, (October 5, 2022), https://newsone.com/4421779/student-debt-relief-lawsuit/

[8] Kyler Alvord, White House Tweets Go Viral for Highlighting Hypocrisy of GOP Lawmakers Complaining About Student Debt Relief, People, (August 26, 2022), https://people.com/politics/white-house-tweets-target-gop-lawmakers-stu…

[9] Alicia Hahn, 2022 Student Loan Debt Statistics: Average Student Loan Debt, Forbes, (September 19, 2022) https://www.forbes.com/advisor/student-loans/average-student-loan-stati…

[10] Cristobal de Brey, et al., “Status and Trends in the Education of Racial and Ethnic Groups 2018,” National Center for Education Statistics, Indicator 22: Financial Aid, https://nces.ed.gov/programs/raceindicators/indicator_rec.asp

[11] Tara Marie Mortensen, et al., “The marijuana user in US news media: an examination of visual stereotypes of race, culture, criminality and normification,” Visual communication (SAGE Publications), 2020, Vol.19 (2), p.231-255, 244 T1.

[12] Silvia S. Martins, et al., “Racial and Ethnic Differences in Cannabis Use Following Legalization in US States With Medical Cannabis Laws,” JAMA Network Open, 4(9), e2127002. https://doi.org/10.1001/jamanetworkopen.2021.27002

[13] Amanda Barroso, “The changing profile of the U.S. military: Smaller in size, more diverse, more women in leadership,” Pew Research Center, (September 10, 2019), https://www.pewresearch.org/fact-tank/2019/09/10/the-changing-profile-o…

[14] Melanie Hanson, “Student Loan Forgiveness Statistics,” Education Data Initiative, (January 1, 2022), https://educationdata.org/student-loan-forgiveness-statistics

[15] American Psychological Association, “Ethnic and Racial Minorities & Socioeconomic Status,” https://www.apa.org/pi/ses/resources/publications/minorities

[16] Andre M. Perry and Adrianna Pita, “What will student loan forgiveness mean for Black students and families?,” Brookings Institute, (August 26, 2022), https://www.brookings.edu/podcast-episode/what-will-bidens-student-loan…

[17] Danielle Douglas-Gabriel, “Wisconsin group says Biden’s student debt plan has ‘improper racial motive’,” Washington Post, (October 4, 2022), https://www.washingtonpost.com/education/2022/10/04/student-loan-forgiv…

[18] Associated Press, “Justice Barrett rejects appeal over Biden student debt plan,” (October 20, 2022), https://apnews.com/article/us-supreme-court-amy-coney-barrett-wisconsin…

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