Student loan debt disproportionately affect students of color and women.
On August 24th, President Biden announced new student loan debt relief. The relief is up to $10,000 for individuals earning less than $125,000 per year and for households earning less than $250,000 a year. Those that received Pell grants for low-income students can have $20,000 worth of debt canceled. The White House estimates that 43 million federal student loan borrowers are eligible for forgiveness. This announcement comes after months of deliberations.
According to a White House Fact Sheet, the total cost of both four-year public and four-year private college has nearly tripled since 1980. The average undergraduate student with loans now graduates with nearly $25,000 in debt.
Further, debt unfairly affects different groups. The student debt burden disproportionately falls on Black students. Twenty years after first enrolling in school, the typical Black borrower who started college in the 1995-96 school year still owed 95% of their original student debt. Further, four years after graduating, nearly half of Black graduates owe more on their loans than their initial balance, compared with just seventeen per cent of White graduates.
The student debt burden also affects men and women differently. Women hold about ⅔ of student loan debt, while female graduates are paid around 74% of what male graduates make. According to the American Association of University Women, women require more education to earn a wage equal to less-educated men. Even with equal loan debts, the wage gap makes it more difficult for women to pay off their loans.
Nearly 8 million borrowers may be eligible to receive relief automatically because relevant income data is already available to the U.S. Department of Education. For those that do not have relevant information available, an application will be available before the pause on federal student loan repayments ends on December 31st.