Abstract

Renee Nicole Allen, The Whiteness of Wealth & Black Student Loan Debt, 25 University of Maryland Law Journal of Race, Religion, Gender and Class 25 (Spring 2025) (420 footnotes). (Full Document)

This for everybody who ain’t made it yet Got five degrees and six figures in debt. ~Logic

The first federal student loans were authorized by Congress in 1958 under the National Defense of Education Act, which extended loans up to $1,000 per student annually. At that time, the annual cost of a college tuition and fees was less than $243 for public schools and $1,011 for private schools. Then, Black students were legally barred from attending most historically White colleges and universities. Today, the average yearly tuition at four-year public colleges is $10,740 and $38,070 for private colleges. And Black people still face racialized barriers to obtaining a college education and enjoying its economic benefits.

In the United States, federal and private student loan debt totals $1.75 trillion. Federal student loans, the focus of this article, account for $1.6 trillion of that debt, held by over 45 million borrowers. On average, each borrower owes $37,105 for their education. In 2010, President Obama signed the Health Care and Education Reconciliation Act abolishing the practice of government-backed loans through private banks (commonly known as the FFEL Program). Now, the federal government holds four types of Direct Loans: Subsidized, Unsubsidized, PLUS, and Consolidation. Available only to undergraduate students and based on financial need, Direct Subsidized Loans are essentially interest free until six months after graduation. Direct Unsubsidized Loans are “available to undergraduate and graduate students regardless of need ...” and begin “to accrue [interest] immediately after taking the loan.” Graduate students pay additional interest for this loan type. Direct PLUS loans are taken out by parents and graduate students with interest accruing while enrolled in school and repayment starts six months after graduation. Direct Consolidation Loans combine “federal loans at a fixed rate under one servicer” with a single interest rate. “[T]he Congressional Budget Office sets the annual rate using a standardized formula for each class of loan, which is then approved by ... Congress.”

While the overall federal student loan debt load is staggering, the disproportionate debt load carried by Black college graduates is extraordinary. Black people borrow more than any other racialized group. For example, 86.6% of Black students borrow federal loans to attend four-year colleges compared to 68% of White students. Black college graduates owe an average of $25,000 more in student loan debt than White college graduates, in part because Black borrowers’ balances increase over time. Further, Black people have higher rates of default across income levels. In a recent study, 61% of Black borrowers disagreed that student loans helped them build wealth. Information about wealth inequality and Black student loan debt supports this sentiment. This racialized debt is connected to material, physical, and psychological detriment. Because of their racialized debt, Black borrowers postpone key life events like buying homes, getting married, starting families, and saving for the future. For these reasons, many have concluded that student loan debt relief is a racial justice issue. Some scholars have analogized the student loan debt crisis facing Black borrowers to modern day sharecropping.

The Black student loan debt disparity directly correlates with Black wealth inequality. This article examines race-neutral federal laws and policies that have contributed to wealth inequality which in turn contributes to the Black student loan debt crisis. The enslavement of African people is the foundation for a system of racialized social and economic subordination. In The Whiteness of Wealth, Dorothy A. Brown explores the ways federal tax policies have contributed to wealth inequality for Black people. Facially neutral federal laws, like the GI Bill, subsidized college education for White men and created opportunities for White people to build wealth through homeownership. Policies like redlining--government-sanctioned racial segregation--ensured that Black veterans and homeowners would not reap wealth benefits from their homes like their White counterparts. This exploration suggests that the federal government, by ignoring the ways law and policy have created and perpetuated inequality, demonstrates complicit bias in ways that create and preserve the economic and educational interests of White people.

On March 13, 2020, in response to COVID-19, President Trump declared a national emergency starting a national shutdown of all nonessential entities. From January through May, there were “1,761,503 aggregated reported [Covid] cases and 103,700 [Covid] deaths in the United States.” In response to the national emergency, former Secretary of Education Betsy DeVos suspended federal student loan repayment and interest accrual. Congress extended the suspension through September 2020.40 Suspensions were pursuant to the Higher Education Relief Opportunities for Students Act of 2003 which authorized modifications or waivers of the Higher Education Act as necessary in connection with a national emergency.

In August of 2022, President Biden announced a three-part plan to cancel student loan debt and provide “relief for borrowers who need it most.” The primary goal of the plan, which fulfilled a campaign promise, was to “provide more breathing room to America’s working families as they continue to recover from the strains associated with the COVID-19 pandemic.” The debt cancelation aspect of the plan targeted low-to-middle income borrowers, those Biden defined as individuals with an annual income less than $125,000 ($250,000 for married couples). It would cancel up to $20,000 for federal student loan borrowers who received Pell Grants and up to $10,000 for borrowers who did not. The second part of the plan included making the student loan system more manageable by decreasing monthly payments for undergraduate loans and improving the Public Service Loan Forgiveness Program (“PSLF”). Finally, the plan aimed to “protect future borrowers and taxpayers by reducing the cost of college and holding schools accountable when they hike up prices.” Though no specific benefit was provided to Black borrowers under the plan, it did recognize that the “student debt burden ... falls disproportionately on Black borrowers.” The plan was met with praise and criticism.

Biden’s plan to cancel student loan debt was challenged by six states. On June 30, 2023, to the dismay of many anxious borrowers, the Supreme Court in Biden v. Nebraska held that the Secretary of Education did not have the authority to cancel roughly $430 billion in federal student loan balances, thus blocking President Biden’s plan for student loan forgiveness. Despite authority delegated to the Secretary to waive or modify provisions of the Education Act to ensure low-to- middle income borrowers were not placed in a worse financial position because of the COVID-19 national emergency, the Court rejected the plan and borrowers resumed payments in October 2023.54

During the pandemic lockdown and in response to President Biden’s campaign promises, I was interviewed about my excessive student loan debt. As a first-generation attorney and the first in my family to earn an advanced degree, I am one of the millions of Black borrowers disproportionately saddled with student loan debt. At the time of this draft, my federal and private student loan debt totals $247,524. Thanks to recent modifications in the Public Service Loan Forgiveness program, I will be eligible to have my federal loans--all $198,619--forgiven before this article is in print. My family’s generational wealth gap will likely stop with me, but my commitment to addressing racial inequalities in student loan debt will not.

To that end, I suggest a radical solution for racial wealth inequality: reparations. A reparation is an “act of making amends, offering expiation, or giving satisfaction for a wrong or injury.” For Black reparations to provide meaningful redress, they must close or lessen the racial wealth gap. This means any proposed reparation must be race-conscious. Focusing only on student loans, I propose direct and indirect redress for Black borrowers. First, $50,000 student loan forgiveness would only be available to Black borrowers as a direct redress for racialized wrongs that are partially responsible for extraordinary Black student loan debt. Second, indirect race-conscious reparations could be accomplished by adjusting the existing PSLF program to include income inequality as a metric for Black student loan forgiveness regardless of chosen profession and employer or income. Importantly, because my proposals aim to redress the cumulative effects of systemic racism, forgiveness would not be limited to Black people with a direct link to an enslaved relative.

This article examines the racial wealth inequalities created through law and policies that disproportionately disadvantage Black federal student loan debt holders. First, this article examines Biden v. Nebraska, the 2023 Supreme Court decision that barred President Biden’s student loan debt cancellation plan, holding that the Secretary of Education was not authorized to cancel student loan debt under the Higher Education Relief Opportunities for Students Act of 2003.62 Next, this article explores the Whiteness of wealth by examining the racial wealth disparities created by slavery and perpetuated by laws and policies that benefit White people and disadvantage Black people, especially Black student loan borrowers. This exploration suggests that the federal government, by ignoring the ways law and policy have created and perpetuated inequality, demonstrates complicit bias in ways that create and preserve the economic and educational interests of White people. It concludes with a radical solution for racial wealth inequality: reparations.

[. . .]

Money trees is the perfect place for shade. ~Kendrick Lamar

The Court’s rejection of Biden’s loan forgiveness plan was devastating to all borrowers, but especially Black borrowers, because refusal to cancel debt is a matter of racial justice for Black borrowers. This article illuminates the connection between racial wealth inequality and the Black federal student loan debt crisis. It reveals how race neutral laws resulted in White affirmative action to the generational economic disadvantage of Black people. It also tells the unique story of Black borrowers, including my own. Finally, it suggests that the federal government, by ignoring the ways law and policy have created and perpetuated inequality, demonstrates complicit bias in ways that create and preserve the economic and educational interests of White people.

Biden v. Nebraska almost guarantees that there will not be any broad loan forgiveness in the final year of the Biden administration, and maybe not ever. The federal government has apologized for the enslavement of Black people and has repeatedly acknowledged the generational harms caused by de jure and de facto anti-Black racism. Yet, it has failed to provide redress for its wrongs. Black reparations seem highly unlikely, but they are necessary. And for Black borrowers like myself, it is a first step in eliminating racial disparities in student loan debt and closing the racial wealth gap.

Associate Professor of Law and Faculty Director, Center for Race and Law, St. John’s University School of Law.