With college more accessible for Black students and less overt, legalized racial discrimination than previous generations, it’s expected that Black households would have been able to chip away at the racial wealth gap. Analysis by the Wall Street Journal shows just the opposite. Not only has Black wealth not grown in the past 30 years, for Black Millennials, it’s actually gotten worse.
According to the news outlet, both the burden of student debt and economic crises have combined to reduce the Black wealth of households in their 30s.
While college was supposed to close that gap, the debt that Black students frequently have to assume to get their college degree unfortunately contributes to the problem. “The median net worth of households with Black college graduates in their 30s has plunged over the past three decades to less than one-tenth the net worth of their white counterparts,” the WSJ reports based on analysis of Federal Reserve data. “The drop is driven by skyrocketing student debt and sluggish income growth, which combine to make it difficult to build savings or buy a home. Now, the generation that hoped to close the racial wealth gap is finding it is only growing wider.”
While 35% of Black baby boomers had student debt around when they were in their 30s, more than 84% of college-educated Black households have student debt. This has Black Millennials owing a median of $44,000 vs less than $6,000 that their parents’ generation owed. Net worth for Black households in their 30s has fallen to $8,300, compared to $50,400 three decades ago.
Meanwhile, white Millennials saw their median net worth grow 17% to $138,000. As of 2019, this means Black households with a college degree have an even lower net worth than white households without one, a gap that has only widened since 1989.
If this gap wasn’t enough, student loan debt casts a shadow onto other areas of Black households’ lives. As per the Brookings Institute, “regardless of the incomes they make after graduation, Black households carry more student debt, which pushes down their creditworthiness. Unsurprisingly, then, Black people with a college degree have lower homeownership rates than white high school dropouts.”
The researchers also find that student loan debt “can delay or change a household’s decisions on a number of issues: where to live, what type of work to do, starting a family,… or launching a business.”
These analyses make it clear that individual financial habits are simply not enough to stem this gaping inequality that continues to widen. Legislators and advocates have thus pressed upon the Biden Administration to tackle student loan debt as a racial equity issue.
In February, Congresswoman Pressley, Senator Warren, and Majority Leader Schumer reintroduced a resolution for Biden to use his authority to cancel $50,000 of student loan debt, given that he’s shown he has to power to cancel the debt of students defrauded by for-profit colleges. In addition, “he has used [his authority] to cancel the interest on federal student loans for borrowers across the country,” Pressley said in a statement. “Student debt cancellation is a racial and economic justice issue and President Biden should act.”
While cancelling some student loan debt will help relieve existing loan-holders, the underlying issue is the growing cost of tuition and the federal government profiting from student loans in the first place.
In response to their College for All Act, introduced in April 2021, Congresswoman Pramila Jayapal and Senator Bernie Sanders noted the impact the legislation could have. “The College for All Act will free students from a lifetime of debt, invest in working people, and transform higher education across America by making community college free for everyone and eliminating tuition and fees at public colleges and universities for families making up to $125,000,” Jayapal said.
Sanders added, “in the wealthiest country in the history of the world, a higher education should be a right for all, not a privilege for the few…If we are going to have the kind of standard of living that the American people deserve, we need to have the best educated workforce in the world.”