How the student loan debt crisis affects democracy
In this May 17, 2018, file photo, new graduates line up before the start of the Bergen Community College commencement at MetLife Stadium in East Rutherford, N.J. There’s no single policy or action that will alleviate America’s $1.74 trillion student loan debt crisis while simultaneously preventing students from taking on unaffordable amounts of future debt. Higher education financing experts are divided on the exact combination of solutions, but all agree it will require a multipronged approach. (AP Photo/Seth Wenig, File)

This is the second of several Defender Network articles that are part of Solutions Journalism Network’s Advancing Democracy initiative. Solutions Journalism provides readers with research on solutions to current problems, where they are being enacted, the challenges and opportunities those solutions provide and how readers can be part of those solutions. The initiative calls on participating media outlets to produce articles focused on issues that are threats to U.S. democracy and provide readers with initiatives aimed at “advancing” democracy. 

Entering college with limited knowledge about the costs of funding an education took a toll on Christal Eve’s finances long-term.

After graduation, over time she accumulated an “astronomical” six figures in student loan debt. Even with scholarship money, it still wasn’t enough for her to afford college, and her parent’s income was slightly above the poverty line. 

“It’s like a catch 22. In corporate America many employers require you to earn a degree, but how do you achieve that when you can’t afford it?” Eve said. 

Although she doesn’t regret obtaining her degree, she said it has negatively impacted her credit. She is in good standing with her loans but the debt-to-income ratio makes it a problem for her to purchase a home. 

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“Currently, I’m in a graduate program to be a licensed professional marriage and family counselor. I’m enrolled so that puts me on a deferred status,” said Eve, an executive director of a Houston non-profit.

“I’m doing all the right things to get ahead in life, but my biggest pet peeve is being punished for taking out a necessary debt and then holding it against me when I now want to enter into homeownership.”

Eve’s story is one of countless and an issue that’s glaring in the national spotlight amid the debate over racial injustice and debt cancelation. 

What’s the problem?

Democratic leaders in Congress, social justice activists, and economists have pressured the Biden administration to forgive federal student loans to address the racial wealth gap, and the fragility of upward mobility that impact Black communities. 

They argue that it would help address years of racist economic policies that make it hard for Black America to acquire wealth at the same rate as whites. Some 44 million Americans owe $1.7 trillion in debt, yet Black Americans on average owe nearly twice as much debt as white Americans.

Higher education has been seen as a critical gateway to achieving economic mobility and stability, but Black families have less wealth needed to pay for college due in part to long-standing systemic racial discrimination. Black families are more likely to borrow more and struggle to make repayments. 

“I’m $90,000 in student loan debt and I have both my bachelor’s and master’s degrees in social work. I did everything I was supposed to do to get a quality education and now I feel bamboozled,” said Quintin Jiles, a content creator, and political commentator. 

Social workers in an entry-level position can expect a median annual wage of around $49,470 according to the U.S Bureau of Labor Statistics. Jiles says the salary is not equitable for the amount he invested in his education. When he completed his degree in 2014, he owed around $70,000. Seven years later the interest increased to $20,000. 

He ultimately left social work and moved back home with his family to focus on content creation. He didn’t begin to monetize until the last five months of 2020 netting $50,000. He hasn’t tackled his debt as of recent and hopes the federal government cancels it. 

“Education has become a luxury but it’s supposed to help the community at large,” he said. “It’s sad that it took the pandemic that killed so many people, but brought so much relief for student loan borrowers. Why do institutions charge so much when the salaries for those degrees aren’t worth the cost?

What are the next steps?

President Joe Biden has canceled $15 billion in student debt from more than 675,000 borrowers with permanent disabilities, people who were misled by their colleges and universities, and those seeking public service loan forgiveness. Federal student loan payments were paused by the federal government in March 2020 under then-President Trump’s administration. The freeze was extended several times and has been delayed again until May 2022. 

Student Debt Cancelation Breakdown

 Borrower Defense to Repayment: $1.5 billion

Total and Permanent Disability: $7 billion

ITT Tech Students: $1.3 billion

Public Service Loan Forgiveness: $5 billion

“Let’s contextualize why these federal loans payment pauses went into effect,” said Fenaba Addo, associate professor of public policy at the University of North Carolina. “It was because of the COVID-19 pandemic. They were responding to a health and economic crisis. The pandemic isn’t over, and it would make sense for this moratorium to continue.”

Addo said the pause allows borrowers to free up extra money to prioritize other important needs and that if the moratorium ends, many will not look forward to paying their bills. She said there isn’t going to be one blanket solution. There should be more focus on the repayment system, improving the cost of college, introducing grants instead of loan-based aid, and increasing the financial well-being of African American households. 

Some schools such as Rice University are paving the way for change. Rice announced a major change by expanding its commitment to loan-free financial aid. By Fall 2022, students who qualify for need-based assistance will be able to receive aid without taking out student loans. It is a move many advocates are pushing institutions to make. 

The idea of giving a kid who’s probably 18 years old, has no job, and gets approved for a $30,000 loan is absurd. That at its very nature is predatory. No bank would make that loan,” said Jordan Riley Senior Associate of the Law Office of David A. Fernandez.

“There should be reform around the existing language of the loans to retire them. The government should allow borrowers to pay back just their principal amount at this point. It’s not exactly profitable for them, but it’s just one solution to a long-term problem.”

Laura Onyeneho

I cover Houston's education system as it relates to the Black community for the Defender as a Report for America corps member. I'm a multimedia journalist and have reported on social, cultural, lifestyle,...