By Angel Rich
Nationwide (BlackNews.com) — It is no secret that the student loan debt crisis of America has excessively impacted Black borrowers and burdened Black students with the most debt. Blacks are five times more likely than whites to default on their student loans with Historically Black Colleges and Universities (HBCU) graduates having 32% more debt than other students.
Many Blacks across the country are making real life decisions at gas stations, debating which is more important during the Corona shut-in, gas or their student loan. Sadly, after four years, Black graduates have almost twice as must student loan debt as their white peers at $53,000. During freshman year, nearly 9 in 10 Blacks borrow federal loans to attend four-year colleges, compared to 6 in 10 whites. Even students from well-off, college educated, two-parent homes experience the same disparities.
Americans owe $1.5 trillion in student loans with the total attributed to young adults the highest since right before The Great Recession. Four-year Black college grads take on $7,400 more in loans than their white peers according to Business Insider. “A 2018 analysis by the Roosevelt Institute found that white families have 12 times the amount of wealth as Black families.”
Coronavirus has officially notified Black America that they can get it too. This news comes as Blacks disproportionately struggle with diabetes, hyper-tension, high-cholesterol, Crisco, and most importantly, health insurance; increasing their risk of dying if contracted.
Doubling-down on the pressure, Blacks are more likely to be essential workers that require frequent social contact with low-wages and improper gear. They are typically less likely to utilize alternative work arrangements, relax on savings or even have a war chest of basic supplies, not-withstanding if they have not been furloughed, laid off or fired.
For Black people already living on the financial edge bridled by student loan debt, the Coronavirus pushes them over the tipping point. Surely the worse off survivors and inevitable victims of this pandemic will be Blacks in debt.
The wealth gap, wealth inequality, and the net worth gap between the 1% and 99% of white and Black Americans continues to widen. These gaps illustrate the impact of abusive inequity and discrimination, as well as power that can be traced back to cotton supplied to build the Industrial Revolution, for free.
As discussed in the book History of the Black Dollar, Blacks endured slavery ($16 trillion+ owed plus tax), the destruction of Freedman’s Savings Bank ($3 million in 1874, $67,925 million owed today), the tumultuous burning of Tulsa’s Black Wall Street in 1921, Black Codes, Jim Crow, Redlining, the GI bill, and the list goes on. (Learn more at historyoftheblackdollar.com)
Market Watch reports that “if you took the values of successive generations of US slaves and applied Treasury bond interest rates to the money over the decades since, today we’re looking at a reparations bill of $16 trillion. That’s about three quarters of US gross domestic product, and slightly more than total US personal disposable income for a year.” That’s roughly $1 million per Black American!
This doesn’t event get into the details of labor, industries, inventions, sharecropping or most importantly return on investment. Market Watch says “if you used private sector equity returns on the money, the figure would go into orbit.” Black Americans would own America.
Instead we are faced with the harsh reality that even Black newborn babies are forced into unequal situations the moment they enter the world. After carefully studying the Jewish community, watching countless Holocaust museums erected and the required reading of The Diary of Anne Frank, it has always been a quandary – why is their injustice not permitted but okay for Blacks? Why is there such sympathy for a horrific situation that did not happen in America that lasted for four years but no empathy for a 400-year lifestyle that is weaved into this land? Where is the requirement for History of the Black Dollar, a book of American History, to be taught in every school?
Now in 2020, during the Coronavirus more than ever, we witness the aftermath of the wealth gap birthing the Black student debt crisis and how it impacts society, limiting opportunities for all citizens. While Blacks have made efforts to attain wealth since arrival in America, Brookings Institution found that $171,000 net worth of the average white family is almost ten times more than Black families ($17,150).
“Brookings does not attribute the racial disparity to just lower levels of parent education or family income. Instead, they point to higher for-profit graduate-school enrollment and lower earnings post-graduation.”
Far worse in DC, the nation’s capital and most gentrified city in the country, the wealth gap blooms higher than 81 times for white households ($284,000) compared to Black Americans ($3,500) according to The Color of Wealth, an Urban Institute report. Black families with a Bachelor’s degree head of household maintain a negative net worth $19,000 while comparable white families have $258,000 in the once 99% Black, Chocolate City.
Throughout the most recent financial disasters, median net worth declined by a choking 44% from 2007 to 2013, compared to a 26% decline in white families.
Families in the top 10% of income (only 3.6% Black), the racial wealth gap is still deep: white median net worth is this group is $1,789,300 versus $343,160 for Blacks. Sadly, the wealth gap permeates at every level except in the bottom quintile (23% Black) where the net worth is zero for everyone.
Young adults of both races have little wealth “but the gap rises quickly with age, and for 65 to 74-year olds accumulates to $302,500 in median white wealth and $46,890 for Blacks,” reports Brookings.
This history of wealth inequality is important to understand for the context of today’s saddling student loan debt. Its legacy is passed down through generations and has now formed an unequal bill. One that Blacks cannot afford to pay right now and shouldn’t ever have been asked for a few reasons.
White families receive ridiculously larger inheritances on average than Blacks. Wonder where that money came from? It is no surprise that inheritances and other generational wealth transfers comprise more of the wealth gap than any other indicator! Let that sink in.
Current taxation of inheritances, estates, and gifts fail to meet certain criteria, are incentivized to delay capital gains until death and help perpetuation economic inequality, forbidding generational course correction. The least America could do is pay for Black Americans education and not beguile them with student loan debt to have a financially safe future.
Financial safety nets paid for by tuition checks written from inheritance accounts that accumulated during the Industrial Revolution from the sale of cotton delivered and farmed by slaves for free are the back bones of white America.
This safety net is not afforded to HBCU students who attend school on many former plantations such as Hampton University where the Emancipation Proclamation was read, freeing slaves across the country.
While HBCUs are 5% of American colleges, they make up 50% of the 100 schools with the lowest student-loan repayment rates according to a Wall Street Journal analysis of Education Department data. Generally Black families have less wealth than other groups and lack the support to repay the loans.
With a financial support system in place, whites pay down their student loans at 10% a year, compared to 4% for Blacks. The SAGE journals also found that “racial inequalities in student debt contribute to the Black-white wealth gap in early adulthood, which increase over time.”
After adjusting for family background and postsecondary characteristics, Black youth reported 85.8% more debt than their white peers when starting their careers, according to the authors. “This disparity grows by 6.7% annually.”
So, as The White House, Congress and the Senate decides how to manage the CARES Act in response to the economic turmoil the country is experiencing, it must consider the financial ICU conditions of the Black community stuck in the hades of student loan debt.
This Black student loan crisis not only brings human suffering to one-third of Blacks who attempt college but to the entire race and country. Inventions, solutions, and vaccines are delayed from Blacks forgoing higher education or having to work two-jobs to pay back their loans instead of building a business.
The Center on Budget and Policy Priorities found that while tuition made up 23% of national household income, it took an astounding 40% of Black household income in 17 states. Even worse, states typically spend less on HBCUS translating to less resources, teachers, support organizations, and financial aid. The Pell Grant, the nation’s largest federal need-based program has sunk from covering 79% of public university cost to 28%, with Black youth taking on loans to make up the balance.
As if the swamp couldn’t get any deeper, the federal government has lacked oversight for decades on protecting Black students from predatory lending and academic institutions. Interestingly, the miseducation of education is causing 75% of Blacks who attend a private college but don’t graduate to default on their loans.
With such a major tear in the fabric of America, its ominous that a louder, more urgent conversation is not happening. “Injustice anywhere is a threat to justice everywhere. We are caught in an inescapable network of mutuality, tied in a single garment of destiny. Whatever affects one directly, affects all indirectly.” — Martin Luther King Jr.
The Black Student Loan Crisis, exasperated further by Coronavirus, is one of our greatest threats to justice everywhere.
Commissioner Angel Rich, Vice Chair of the DC Financial Literacy Council and Founder of The Wealth Factory, is an award-winning Author of History of the Black Dollar, Black Woman Politics, and WealthyLife Financial Literacy Textbook. Named the Next Steve Jobs by Forbes, she is recognized as one of the top 5 Most Influential People of African Descent by the United Nations and an historic figure by the Sandy Spring Slave Museum. Inventor of the first mobile financial literacy game CreditStacker, she previously worked as a Global Market Research Analyst at Prudential Financial and currently serves on many boards including the Charter School Development Corporation, AT&T Dream in Black and 757 Accelerate.