OP-ED: Student Loan Debt is a Crisis

OP-ED: Student Loan Debt is a Crisis

By Harry L. Williams

There has been a lot of talk about whether or not there is a crisis on the border. I will leave that debate to the politicians. However, there is no debate about whether or not America has a crisis hitting all 50 states and over 40 million people. This crisis is impacting millions of students pursuing their dreams of earning a college degree. The crisis is impacting millions of young people coming out of college, wanting to be fiscally responsible and save, and buy their first home. What is the crisis? It is America’s $1.56 trillion student loan  debt.

Today, student loan debt is the second greatest source of individual debt, only behind mortgages, according to the Federal Reserve. Something must be done about the ever-rising student debt, and the Thurgood Marshall College Fund (TMCF) is taking the issue of financial literacy with HBCU students head-on. Exposing the nearly 300,000 students we represent to the host of scholarship offerings is one of our main strategies for decreasing student loan dependence. TMCF understands that student loans disproportionately impact minority students – with the greatest negative impact on African-American students. We have to put just as much early attention on student loan debt by providing student scholarships, grants and wraparound services, so HBCU students can persist in their studies without dropping out because of finances. The more scholarships we can award, the fewer loans students are forced to take, so they graduate without the strain of insurmountable student loan debt.

As the wealth gap continues to grow we know that by 2053, the Net Worth of African-American families is projected to hit $0, so there is a clear urgency to educate and support organizations that have direct connections to young African American students that will be entering the workforce. TMCF is committed to empowering students attending HBCUs on how to secure and keep a good paying job and build a career into the C-Suite, or become entrepreneurs, save money and build wealth for the future in the hopes of being great global leaders that give back to future generations.

Additionally, we are teaching HBCU students to be better college consumers, moving career-focused programming to  Freshmen and Sophomores, so they can choose college course strategically, in order to graduate in four years, while entering the talent pipeline earlier.

More than 80% of all HBCU students attend TMCF member-schools and 97% of those students rely on financial aid in their pursuit of a degree. Through our partnerships with many companies such as Wells Fargo, Boeing, Ally, and Apple we are providing scholarships, internships, corporate immersions, and innovation programs as well as good paying jobs.

For example, over the course of our partnership with Wells Fargo, they have provided more than $7.2 million in support of TMCF student scholarships and financial literacy curriculum development and announced a $1.1 million for the 2019-2020 academic year. In 2018, TMCF provided close to $10 million in direct aid for student scholarships, stipends, awards, wrap-around services, and institutional grants. Those are real dollars and for the majority of the students we serve, the dollars are transformational. This is important because according to a LendEDU study nearly three in 10 college students in America are solely responsible for paying for all of their higher education costs.

Finances should never be a barrier to graduation, nor should the financial impact of earning a college degree be a barrier for buying a home, saving money, starting a family, and having a good credit score. TMCF prides itself on building pipelines into good paying jobs but we also have to work to ensure that those students are able to truly reap the financial benefits of their achievements without having to pay off years of student loan debt.

Yes, the student loan situation is a crisis that must be addressed early and often with students, parents, family members, and guidance counselors. We need to make this an issue on the campaign trail on both sides of the aisle in every election, not just the 2020 presidential one. Roll Call recently reported that there are 66 members of Congress who are currently paying off their own personal student loans or debts for dependents. “Collectively, the 44 Democrats and 24 Republicans have higher education liabilities of $2.5 million, according to recent financial disclosures. The median student loan debt is $15,000, while average debt is $37,000.”

This is not a partisan issue and we will continue advocating for bipartisan solutions and effective student financial aid literacy opportunities especially for the Black College Community because we know they work. The student loan debt crisis can be corrected if we all work together to make sure our future innovators, government and corporate leaders can lead without the crippling burden of student loans. The time is now.

This article originally appeared in The Westside Gazette

The Student Loan Debt Crisis Is a Civil Rights Issue

The Student Loan Debt Crisis Is a Civil Rights Issue

From attacks on voting rights to police killings of unarmed civilians and growing inequities in earnings and wealth, the civil rights gains of the past six decades are facing threat after threat. But one front in the fight for full equality—meaningful access to higher education—is particularly urgent. With 65 percent of jobs soon requiring more than a high school diploma, the need is greater than ever, especially for African Americans and other communities of color.

More than 50 years ago, Congress passed the Higher Education Act (HEA), intending to open the doors to higher education by providing students with financial assistance and low-interest loans. Conventional wisdom has traditionally held two things: 1) Higher education is the great equalizer; 2) It is okay to take out debt for the tickets to upward mobility: a college education and a home mortgage. These life decisions—and the struggles and sacrifices that made them possible—helped to build and grow the Black middle class.

Now, aspirations for advancement are colliding with the discriminatory legacy of the financial crisis. Our country’s student loan bill has skyrocketed. Student debt is now the second-largest source of household debt after housing. Forty-four million Americans have $1.4 trillion in student loan debt. One reason: Since the 1990s, the average tuition and fees at our universities have jumped an average of 157–237 percent depending on the type of institution.

As with the Great Recession, people of color, poor people, and predatory institutions are at the center of this socioeconomic catastrophe. They must also be at the center of the solutions.

We must face up to the fact that students of color are more likely to borrow for their education and, unfortunately, to default on these loans. Even Black college graduates default on their loans at almost four times the rate of their White counterparts and are more likely to default than even White dropouts.

This increased risk of defaulting on student loans is the direct result of inequities in financial resources, as well as discrimination in hiring, salaries and, all too often, social capital. In 2013, the median White family had 13 times more wealth than the median black family and 10 times more wealth than the median Latino family. African American students tend to take out more debt than their White counterparts, and both Blacks and Latinos are more likely to default than Whites. Since Blacks with bachelor’s degrees earn only 79 percent and Latinos only 83 percent of what their White counterparts earn, African American and Hispanic students have a harder time repaying their loans.

Further contributing to the crisis, Blacks and Latinos comprise 41 percent of the students at the high-cost, low-quality, for-profit colleges. These institutions frequently fail to prepare students for high-salary jobs, instead saddling them with exorbitant debts that they can’t repay.

How then can we address these challenges? Education Secretary Betsy DeVos wants to ease regulations on the loan servicers and for-profit colleges that have gotten us into this mess. U.S. Rep. Virginia Foxx (R-N.C.) of the House Education and Workforce Committee would take this effort even further. Her proposal for reauthorizing the HEA, the “PROSPER Act,” would ensure that students will have to borrow more to get a postsecondary education with the very real likelihood that they will never pay off the debt. This would all but guarantee that predatory, for-profit programs would continue to rise exponentially right alongside our national student debt bill. Efforts to make student aid more costly for students rather than hold institutions accountable for what they do with the aid reflects either a catastrophic misunderstanding of the root causes of this issue or something more disturbing: the blatant effort to recreate the system we had before the HEA was enacted. In this system, traditional college was by and large only accessible to the wealthy, who were usually White.

Fixing our broken student debt system should not mean un-doing years of progress since the HEA or saddling marginalized groups with a lifetime of debt. Instead, we need to hold student loan servicers, debt collectors, and institutions of all kinds accountable for their practices. African Americans, Latinos and low-income students from all backgrounds need more income-based grants, loans, financial assistance, and admissions policies that tear down barriers of color, culture, and class, not support them.

Helping college graduates to repay their loans isn’t the only challenge. The challenge is enabling and empowering all our young people to make their fullest contribution to our country. This is, in the last analysis, a debt that all Americans owe to ourselves and our nation’s future. 

Wade Henderson is a founding board member of the Center for Responsible Lending. You can follow Wade on Twitter @Wade4Justice.

“The Student Loan Debt Crisis Is a Civil Rights Issue,” first appeared on BlackVoiceNews.