A Solvable Crisis: Student Debt Solutions in America
For decades, attending college has been a cultural backbone and societal standard. Having a degree has become a requirement to qualify for many jobs across the employment landscape of the United States.
Between 2020 to 2030, undergraduate enrollment is predicted to increase by 8%. These potential increases reflect the American expectation to pursue higher education. Students enroll in universities and secondary schools in order to set themselves on an upward trajectory toward joining the workforce. However, a majority of these students will face the most common and pervasive obstacle to graduating with a degree: paying tuition.
Education is expensive. Many students have to take out loans to be able to complete their degrees. Fifty-five percent of the students enrolled in public undergraduate institutions have student loans. This statistic climbs even higher for private schools, rising to 57%. The student debt crisis, thus, affects a large majority of Americans, and leaves an even deeper impression on marginalized communities.
Black students are more likely to take out student loans, and also have a harder time paying them back. The economic impacts on Black borrowers are vast, ranging from reduced credit scores to an inability to develop generational wealth. This perpetuates a cycle of economic distress, counteracting many positives that pursuing higher education may offer.
With an abundance of adverse outcomes to taking out student loans, a question arises: how can the debt crisis be solved equitably?
The United States has remained in constant discussion about what approach to this issue is the right one. Partial debt forgiveness has been recognized as a realistic option. Most recently, President Biden announced his plan to forgive $10,000 in student loans for families earning less than $125,000 per year. This effort—though a definite stride in the right direction—is not enough to halt the debt crisis.
Partial forgiveness does not account for the disparities between Black and white borrowers. Four years after graduation, Black borrowers on average owe $53,000, which is nearly double the cost white borrowers pay. The Education Data Initiative recorded that Black borrowers have more student debt than their median annual incomes, significantly impacting their ability to accumulate wealth over time through assets such as buying a home, starting businesses, and making investments.
With a slower payoff of these debts, Black Americans face significant economic damages that further wealth disparities. Partial debt forgiveness is not enough to provide financial relief to Black borrowers or to prevent future generations of Black students from undergoing the same fate. However, the United States must build upon existing forgiveness plans in order to achieve national financial relief.
Acknowledging that free college will not become widely accessible in the near future, larger cancellations of student debt are the best and most inclusive option. Governmental officials such as Elizabeth Warren have backed increasing forgiveness plans to $50,000. This increase, as discovered in 2019, would eliminate around 93% of Black student debt. Ideally, full debt cancellation would eliminate the debt crisis completely; however it is not a solution that is realistic, given present deliberations. Instead, it serves as a final destination on the road to equitable education.
Another beneficial route is trade school. Trade schools allow for the exploration and development of specific trade-related skills and work experience, making the transition into the workforce less time consuming. Career paths range from construction all the way to the arts. However, a lack of support from for-profit institutions leads many low-income—specifically Black—students deeper into poverty. According to Megan Holland and Stefanie Deluca,
“When youth with little career preparation entered into narrowly focused and costly programs, it was difficult…once they realized they did not like their trade…were unqualified for it, or…the field lacked jobs. Some…adapted by switching programs or attempting multiple credentials, but most ended up…acquiring not credentials but more debt along the way.”
Low-income students rely on these schools to build connections and experience for their future careers, so it can lead to poor career outcomes when the cost of schooling pushes them out of their programs. To make this path accessible for all attendees, more non-profit and subsidized vocational school options are necessary.
A life unrestricted by student debt is possible, if the country continues to prioritize debt forgiveness and subsidized schooling. Free from debt, marginalized individuals will be able to build their credit, collect assets, and create generational wealth. This will greatly leverage future generations, allowing them to escape generational poverty and access new opportunities.
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Alicia Hahn, https://www.forbes.com/advisor/student-loans/average-student-loan-statistics/
Hannah Grabenstein and Saher Khan, https://www.pbs.org/newshour/economy/student-loan-debt-has-a-lasting-effect-on-black-borrowers-despite-the-latest-freeze-in-payments
Judith Scott Clayton, https://www.brookings.edu/research/black-white-disparity-in-student-loan-debt-more-than-triples-after-graduation/
Megan M. Holland and Stefanie Deluca, https://journals.sagepub.com/doi/full/10.1177/0038040716666607#bibr36-0038040716666607
Melanie Hanson, https://educationdata.org/student-loan-debt-by-race
Melanie Hanson, https://educationdata.org/student-loan-debt-by-income-level
National Center for Education Statistics, https://nces.ed.gov/programs/coe/indicator/cha
New York State Education Department, http://www.nysed.gov/career-technical-education/student-career-areas-trade-and-technical-education