By Nicquel Terry Ellis, CNN
Tony Montgomery has been forced to postpone his law school plans and cannot afford to buy a house or pay for health insurance because he is drowning in $ 30,000 in student loan debt.
Montgomery, a home teacher and tutor from Mansfield, Texas, said he had to work night shifts at a local grocery store to pay his student loan bills. He currently lives with his mother and helps him financially.
The federal government’s hiatus on student loan payments and accrued interest during the Covid-19 pandemic has given Montgomery a chance to build a rainy day fund, but he expects this to decline quickly when payments will resume in February. The U.S. Department of Education on Wednesday announced major changes to a federal student loan cancellation program that the agency said could bring relief to more than 550,000 borrowers working in the public and non-profit sectors. lucrative, but that still might not help graduates like Montgomery.
Montgomery, 30, is one of millions of black college graduates who face significant student debt that has kept them from achieving the same financial freedom as many of their white counterparts.
Some graduates, like Montgomery, say they are unable to continue their education after earning a bachelor’s degree, buying a house, opening a business, raising a family, or traveling because monthly student loan payments leave them strapped for cash. . It’s a problem that experts say has worsened the racial wealth gap in the country where the median net worth of a white family is $ 188,200, compared to $ 24,100 for a black family.
âThis is not just a lost economic opportunity for us, but for our children, our communities as well,â said Montgomery. âIt makes it a lot harder to keep up with the rising cost of living, rising rents and it really feels like the American dream of homeownership will just never be achievable. And it’s disappointing because there are things that can be done about it.
The Brookings Institution estimates that, on average, black college graduates owe $ 52,726 in student debt compared to white college graduates who owe $ 28,006. The average Asian borrower owes around $ 25,000 while Hispanic borrowers owe around $ 30,000.
The disparity has led many black executives and borrowers to pressure President Joe Biden’s administration to consider the plight of black Americans when deciding who to write off their student loan debt.
Biden has so far written off $ 9.5 billion in student loan debt for about 563,000 borrowers, the US Department of Education said in August. These borrowers included victims of collegiate for-profit fraud and people with permanent disabilities. In August, the Biden administration announced it was extending the freeze on federal student loan payments until January 2022 under pressure from lawmakers and advocates.
William Spriggs, professor of economics at Howard University, said the nation’s legacy of discrimination and racism has left many black families unable to afford college tuition – especially those who choose to attend predominantly white flagship universities that charge more tuition than HBCUs and smaller colleges.
Blacks who cannot afford college are more likely to apply for student loans because they believe education is the key to overcoming prejudice in the job market, Spriggs said.
White families, however, benefited from the privileges and generational wealth accumulated by their ancestors who had better access to college, well-paying jobs and property, he said. For example, in the 1940s the GI Bill was passed, providing low-interest mortgages and allowances to cover college or business school tuition fees for millions of returning veterans. of World War II. Black veterans have struggled to get the benefits of the bill due to racist institutions and racist lawmakers creating roadblocks for them.
âThe racial wealth gap is the accumulation of advantages,â Spriggs said. âWealth is saving in many forms. It could be assets like houses, stocks, land and a lot of those things don’t go away. When someone accumulates this, it continues to be passed on and the children stand on someone’s financial shoulders.
A “dressing” solution
NAACP urges the Biden administration to write off a minimum of $ 50,000 in student debt for all borrowers through its $ 50,000 and beyond campaign. Canceling student debt would provide black borrowers with the opportunity to own property, grow the economy, boost discretionary income and fuel upward mobility in black communities, said Wisdom Cole, National Director Acting of the Youth Colleges Division of the NAACP.
Cole said lawmakers need to provide more permanent relief to distressed borrowers.
“We are happy that there has been an extension of the (payment) break but we are not done fighting yet,” said Cole. âThe break is a band-aid. It is a temporary solution. We must see wider spread cancellations. “
Cole said that historically, black colleges and universities have served as a model for providing financial assistance to black families who have been disproportionately affected by the economic and health crisis caused by the Covid-19 pandemic.
More than 20 HBCUs have made headlines this year for clearing student account balances with CARES (Coronavirus Aid, Relief and Economic Security) funds. Schools included Florida Agricultural and Mechanical University (FAMU), Clark Atlanta University, Howard University, and Morehouse College.
Larry Robinson, president of FAMU, said he recognizes that many black students and graduates are struggling with debt because they do not come from families who can afford their education. The average FAMU student comes from a household with an annual income of less than $ 50,000, Robinson said.
He said the university is working to help students avoid taking out student loans whenever possible, as this often leads to “dire consequences” after graduation.
âIt affects their next steps, their way of life, where they live, their ability to support their families,â said Robinson.
Robinson said with so many student families suffering job losses due to the pandemic, the Biden administration should consider writing off all their debts.
âThe economic results will be even longer with our students and their families,â said Robinson. “There wouldn’t be a better time in my opinion for them to start with a clean slate.”
The struggle for financial freedom
Some black leaders say colleges and lawmakers need to come up with longer-term solutions to the student debt crisis.
Harry L. Williams, president and CEO of the Thurgood Marshall College Fund, said he wanted to see the federal Pell Grant – which is awarded to undergraduates with exceptional financial need – doubled. He also wants more colleges and businesses to create programs and scholarships that help students avoid taking out loans.
Too many black graduates, Williams said, enter the workforce with significant debt and bad credit scores, making it difficult for them to buy a home or earn low interest rates. Some also struggle to secure the funds to start businesses, he said.
âThis is something that we have to continue to address,â said Williams. “The downside our students have is that when they graduate they have so much debt that they’ve already racked up that puts them back in the hole.”
Nicole Hale, a 34-year-old data analyst, said her student loan debt balance was so “astronomical” that she had to suspend her doctoral program at Walden University a few years ago because she had no more money. Hale also had to postpone her dream of starting an online business for female musicians.
The student loan payment hiatus, however, allowed Hale to pay off his car and eliminate some credit card debt. She also moved with her parents to Philadelphia last year to help them financially. With federal student loan payments resuming in February, Hall said she feared the Biden administration had no plans to help black graduates get into debt.
âI think a lot of us (millennials) were relying on this administration to take office and do something immediately,â Hale said. âI really think we had high hopes. And see that nothing is done, but yet we see money being invested in other placesâ¦ I really want to know if the Biden administration understands how serious this is.
â¢ & Â© 2021 Cable News Network, Inc., a WarnerMedia Company. All rights reserved.