The NAACP is warning President Joe Biden that failing to deliver on student debt relief if the Supreme Court strikes down his forgiveness plan will be tantamount to breaking his promises to narrow the racial wealth gap.
In a letter sent to Biden on Wednesday, first reported by NBC, the group expressed frustration over Biden’s recent move to end the student loan payment pause at the end of this summer as part of his deal with House Majority Leader Kevin McCarthy (R-California) to raise the national debt ceiling. The group says that moving to restart payments will harm Black borrowers the most, as Black people are disproportionately affected by student loans and their harmful financial effects.
“The resolution of the debt ceiling crisis is one we wholeheartedly welcomed, and we appreciate all that went into debt ceiling negotiations. However, we are disappointed that the needs of Black communities have suffered from the negotiated agreement that will erode economic progress for Black Americans,” says the letter signed by NAACP President Derrick Johnson and NAACP Youth and College Division’s national director Wisdom Cole.
“Given the Administration’s stated focus on equity, it is disappointing that narrowing the racial wealth gap was not given a higher priority,” the letter continues.
The White House confirmed this week that, as a result of the deal, interest on student loans will restart on September 1, while payments will be due beginning in October.
The NAACP leaders further warned Biden that the administration must have a plan to address the student debt crisis if the Supreme Court strikes down his plan to cancel up to $20,000 of student loans for a wide swath of borrowers, as the Court is poised to do — or else Biden will risk losing support from Black voters across the country.
“Let us be clear — absent further, swift action in the wake of an unfavorable ruling from the Court, Black voters stand to be incredibly disillusioned by an Administration who failed to deliver on key campaign promises but succeeded in widening the racial wealth gap and propelling their families, friends, neighbors, and colleagues into economic uncertainty,” the letter warned.
So far, the Biden administration has not indicated whether or not it has a plan to deliver relief to borrowers if the Supreme Court strikes down his plan. If it does, millions of borrowers will be propelled further into financial precarity, facing a double whammy of no loan cancellation and the end of the payment pause.
Black people are indeed the most likely racial group to hold student debt and the most likely to experience lasting effects from that debt. According to Education Department data analyzed by the Legal Defense Fund’s Thurgood Marshall Institute in 2019, 86 percent of Black students take out student loans to attend college, while only 68 percent of white students do the same. Black borrowers also take nearly $10,000 more in loans on average over their white counterparts, data shows.
Further, years after the initial loan is taken out, Black borrowers are the most likely of any major racial group to have a loan balance that exceeds the original amount, a Brookings Institute report found in 2021, affecting about 75 percent of Black borrowers versus slightly less than 60 percent of borrowers in the U.S. as a whole.
The persistent and severe wealth gap between Black people and white people in the U.S. is further compounded by student loans. According to a RAND Corporation analysis earlier this year, the median wealth gap between a Black and white household in the U.S. is $164,000. The average wealth gap, meanwhile, is a staggering $840,000. Eliminating the gap, the analysis found, would take $15 trillion.
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