A growing group of historically black colleges and universities (HBCUs) have moved to write off student debt in recent months. According to the United Negro College Fund, more than 20 HBCUs are using the $ 5 billion for debt relief created from federal emergency relief funds for higher education in the event of a pandemic. With the student debt burden deepening wealth inequality and the debt disparity persisting among black students, this new wave of HBCU student debt cancellation is a game-changer in the wealth gap. racial.
The breakdown you need to know:
According to a recent study by the journal Sociology of Race and Ethnicity, young black adults take on 85% more debt than their white counterparts, and this disparity worsens by 7% every year after borrowers leave school. CultureBanx reported that students of color typically rack up hundreds of thousands of dollars in student loan debt, meaning they are unable to focus on other financial goals such as buying a home, renting paying off credit card debt and saving for retirement.
Eliminating this will begin to narrow the racial wealth gap for young families, with 86.6% of black students taking out federal loans to attend four-year colleges, compared to just 59.9% of white students. Not to mention that HBCU students are more likely to default over a 12-year period, than African Americans attending other four-year colleges and universities, according to the Wall Street Journal. One more reason why the cancellation of this debt will have a positive impact in the long term.
“I can use this money and invest it in my future,” Wilberforce graduate Rodman Allen in 2021 said in a statement.
Shorten the financial aid line:
Continuing on his campaign promise to cancel student loans in increments, President Biden has already canceled a total of $ 2.8 billion in debt, with more plans on the horizon. Specifically, in April, the US Department of Education said the HBCUs would receive $ 2.6 billion of the $ 40 billion earmarked for higher education under the American Rescue Plan Act. These institutions have put the money to good use. Here’s a breakdown of how some of these great schools have used the funding:
- South Carolina State University – Canceled $ 9.8 million in student debt for 2,500 students
- Wilberforce University – Canceled all student loan debts and fines owed to the school classes of 2020 and 2021
- Delaware State University – Canceled up to $ 930,000 in student loan debts for over 220 recent graduates of 2020 and 2021
- Clark University of Atlanta – Elimination of student account balances from the last five semesters
- Shaw University – Unlocked 195,330 for 57 seniors and covers summer tuition fees for over 400 students
- Fayetteville State University – Compensation of nearly $ 1.7 million in tuition fees and unpaid fees for 1,442 students
- Trinidad Washington – A predominantly black institution, wiped out the balances of 400 students, for $ 1.8 million
- Philander Smith College – Spent nearly $ 2 million to settle the debts of nearly 500 new graduates and students in training
- Elizabeth City State University – Compensated the balances of 212 students going back to May 2020, with a total of $ 284,500
Knowledge of the situation:
Schools say they could not have offered debt cancellation without the wave of funds the federal government released during the pandemic. However, it is important to note that this is student debt that students owe to college, not student loan cancellation for private or federal student loans that are canceled.