America’s racial wealth gap is well-documented, even if many continue to underestimate its existence. Black Americans’ net worth is, on average, less than 15 percent of white Americans’, the legacy of centuries of systemic anti-Black racism. Moreover, both political parties have failed time and again to address the inequities facing Black Americans.
But what if I told you that an effective way to start closing this gap was within reach? According to the scholars I talked with who study this issue, canceling student debt is one of the best ways to start to close America’s racial wealth gap, and although it has its risks, it’s something that President Biden can do on his own by executive order.
“Higher education was supposed to be the engine for some to secure financial security and stability,” said Fenaba Addo, a professor of public policy at the University of North Carolina, Chapel Hill, who has researched the links between debt and wealth inequality. But she told me that just hasn’t happened. “The realized gains have not been distributed equally, and student debt has contributed to that,” said Addo.
Today, the typical graduating college student owes about $30,000 in student debt, about four times more than they did 50 years ago. But that topline figure masks some real racial disparities. Consider that because Black students tend to come from poorer households than their white counterparts, they are more likely to take out loans — and take out larger loans. Moreover, even white students who end up borrowing money for college have, on average, more preexisting family wealth at their disposal to pay down their debts.
In other words, student debt exacerbates the racial wealth gap, starting from the moment that newly christened graduates toss their caps in the air. [Continue reading…]