Representative Ayanna Pressley (D-MA) lent her voice to the choir urging the Biden administration to write off student debt, highlighting the impact on black borrowers.
“Canceling student loans is a matter of racial and economic justice in our country,” Pressley said at a virtual conference hosted by the Consumer Federation of America. “Black student borrowers are forced to borrow more than their white peers and are five times more likely to default on a student loan.”
Further, Pressley argued, the disparity was the “result of generations of systemic racism” that prevented black Americans from creating wealth. The cancellation of this debt “must therefore be an essential element of a truly equitable economic recovery“.
Pressley, a member of the so-called “Squad” of women elected to the House of Representatives in 2018, which also includes Alexandria Ocasio-Cortez (D-NY), Ilhan Omar (D-MN) and Rashida Tlaib (D-MI) , is one of many Democrats who are pressuring the new Biden administration to write off some student loan debt through executive action shortly after the president-elect takes office on January 20, 2021 .
In the home state of Pressley, Massachusetts, 855,000 borrowers hold approximately $ 33 billion in student loan debt as of 2019. Nationwide, approximately 43 million Americans hold more than $ 1.5 trillion in outstanding student loans guaranteed by the federal government.
“The crisis is really the result… of failed policy choices,” Pressley added at a separate conference at the Center for Responsible Lending on Thursday. “A failed policy that has resulted in chronic underfunding of our nation’s historically black colleges and universities, community colleges and state universities… [who] had to raise tuition fees to cover skyrocketing costs, forcing black families to borrow more to foot the bill. “
She also recalled the psychological toll of debt collection, sharing her own story of how she felt traumatized child by incessant calls to his personal phone line for collectors.
“A phone ringing was very triggering for me,” she said. “The desperation of debt is real.”
Private Approaches to Income-Based Repayment
Several historically black colleges and universities (HBCU) regrouped to create an alternative to the federal income-based repayment program to specifically address the racial gap in student debt.
From 2021, the association Student Freedom Initiative (SFI) will offer STEM students at participating schools to subscribe to an income-based repayment plan after graduation. SFI will pay for the student in advance and will be repaid by the student after graduation on a monthly basis – depending on the income of each borrower – over a period of up to 20 years.
The program is “an alternative to the accumulation of debts… [and] is very sensitive to their needs, income levels, etc. Florida A&M University (FAMU) President Larry Robinson told Yahoo Finance (video above). FAMU is one of nine participating HBCUs.
The program aims to help students get good internships, tutoring, mentoring, to make sure they graduate as early as possible. And the refunds would be fed back into the program and used to fund the next cohort of students.
Income sensitivity is essential, Robinson added, because it is “very, very, important that students can pay at a rate that allows them to continue to grow and develop in their working lives.”
Aarthi is a reporter for Yahoo Finance. Follow her on Twitter @aarthiswami.
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