The National Association for the Advancement of Colored People (NAACP) is raising red flags, expressing grave concerns that if the Supreme Court rejects President Biden’s student loan forgiveness plan, it will feel like a broken promise for Black voters who were looking forward to some relief on the racial wealth gap.
In a recent letter to Biden, the NAACP voiced their disappointment over Biden’s decision to lift the student loan payment freeze later this summer. This is part of his arrangement with House Majority Leader Kevin McCarthy to hike the national debt ceiling. The group argues that resuming payments will disproportionately affect Black borrowers, as they are often the most burdened by the financial impacts of student loans.
“While we welcomed the resolution of the debt ceiling crisis and appreciated the negotiations, we feel let down that the concerns of Black communities seem to have taken a backseat in the deal. This could potentially undermine the economic progress for Black Americans,” stated the letter signed by NAACP President Derrick Johnson and Wisdom Cole, National Director of the NAACP Youth and College Division.
The letter adds, “Given the Administration’s emphasis on equity, it’s disheartening to see that reducing the racial wealth gap wasn’t a top priority.”
Confirming the NAACP’s concerns, the White House announced that, as a consequence of the debt ceiling deal, student loan interest would be reinstated from September 1, with loan repayments due from October.
NAACP leaders further cautioned President Biden that if his $20,000 loan forgiveness plan for a broad section of borrowers is struck down by the Supreme Court—which seems likely—there needs to be a contingency plan in place. Failure to do so, the NAACP warns, risks alienating Black voters nationwide.
The leaders emphasize, “Without further action following an unfavorable ruling from the Court, Black voters could feel deeply let down by an Administration that was unable to fulfill key campaign promises, resulting in a widened racial wealth gap and increased economic uncertainty.”
So far, the Biden administration has not shared any contingency plans if the Supreme Court rejects the student loan relief proposal. If this happens, countless borrowers will be thrust further into financial instability, facing the double blow of no loan cancellation and resumption of repayments.
It’s worth noting that Black people are the most likely racial group to carry student debt and suffer its lasting consequences. According to a 2019 analysis by the Legal Defense Fund’s Thurgood Marshall Institute, 86% of Black students take out loans for college, compared to 68% of white students. Black students also borrow nearly $10,000 more on average than their white counterparts.
Moreover, years after taking out the initial loan, Black borrowers are most likely to have a loan balance that exceeds the original amount. This trend impacts about 75% of Black borrowers, as opposed to just under 60% of borrowers overall, according to a 2021 report by the Brookings Institute.
The ongoing and significant wealth gap between Black and white individuals in the U.S. is only amplified by student loans. A RAND Corporation analysis earlier this year revealed that the median wealth gap between a Black and white household in the U.S. stands at $164,000, with the average gap reaching a shocking $840,000. Closing this gap, the analysis found would require a staggering $15 trillion.