Report: Unsustainable Student Loan Debt Has Severe Impact on Borrowers of Color

This week, the Center for Responsible Lending and the National Association for the Advancement of Colored People (NAACP) released a report finding that student loan debt is unsustainable for many student borrowers, especially borrowers of color.

Quicksand: Borrowers Of Color & The Student Debt Crisis” offers policy recommendations for reforming the country’s broken and inefficient student loan system, close the racial wealth gap, and ensure that the system is fair to all students. The report, inspired by the $1.5 trillion-dollar student debt crisis, was released in conjunction with NAACP’s 110th National Convention in Detroit and to facilitate a pathway to a comprehensive solution that involves civil rights organizations.

“Structural racism has made it more difficult for African-American students to economically, educationally and otherwise catch up with their white counterparts. Despite making regular payments, many African American students who have attended college are disproportionately drowning in debt. Needless to say, the time to end this situation is long-overdue,” said Hilary O. Shelton, NAACP Washington Bureau director and senior vice president for Policy and Advocacy. “We urge policymakers to put an end to predatory for-profit programs that target communities of color and strengthen and boost federal funding for public institutions that provide quality higher education alternatives. Without adequate political support in higher education, we’ll never close the racial wealth gap.”

The report calls for fundamental reforms to provide fair opportunities for students, including African-American and Latinx student borrowers, who are most affected by the flaws in the current system. The research also notes that student debt has become a significant drag on the overall economy, depressing purchasing power and preventing people from investing in their economic and family future.

“It has become increasingly more difficult for those without financial wealth to have a sustainable pathway to higher education,” said Debbie Goldstein, executive vice president at the Center for Responsible Lending. “Today, the Department of Education under the current Administration is not only failing to help close the racial wealth and income gap, but it is perpetuating the problem. Fortunately, however, the student loan crisis is solvable. Policymakers can create more pathways to loan repayment and forgiveness, strengthen oversight of public dollars spent on education, and hold for-profit institutions, servicers, and other predatory forces accountable for their role in exacerbating the growing student loan debt crisis and causing thousands of borrowers to spiral into poverty.”

Specifically, the research report recommends:

  • Improve repayment options and provide debt relief: Make it easier for students who currently carry debt loads to pay off their loans and move on with their financial lives so that they can participate in a growing economy through improvements to income-driven repayment, reduced interest rates, the availability of hardship bankruptcy relief, and broad debt cancellation;
  • Strengthen servicing standards and oversight: Reform student loan servicing by setting clear standards and supporting students navigating student loan debt so that they can enroll in affordable repayment options quickly. Borrowers deserve clear and timely information about their options and basic consumer protections. Additionally, servicers should not pursue past-due debts through Social Security offsets and garnishments that are more aggressive than income-driven repayment options. Further, hold the Department of Education accountable for basic oversight and management of servicing and collection standards;
  • Prevent abuses by for-profit institutions: Stop funding ineffective and abusive for-profit schools and hold schools accountable for student performance by establishing standards around the use of federal dollars, closing the 90/10 loophole, protecting students who attended closed schools, and reinstating meaningful Gainful Employment and Borrower Defense to Repayment rules; and
  • Make college accessible for ordinary Americans: Reinvest in higher education as a public good by providing debt-free college options for students at two- and four-year HBCUs and public institutions, boosting funding to HBCUs and other minority-serving institutions, and protecting and expanding Pell Grants to prevent this crisis for the next generation of students.

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