Black Borrowers Most Impacted By Supreme Court Blocking Student Debt Relief Plan

Black borrowers have been disproportionately impacted by the Supreme Court’s decision to block President Biden’s student loan forgiveness plan in June.

NAACP President and CEO Derrick Johnson said the decision “is a clear disregard for what millions of Americans need – especially Black Americans.”

The Forgiveness Plan

Last year, President Biden announced a plan to deliver up to $20,000 in student debt relief to over 40 million borrowers. 

Borrowers who made less than $125,000 a year in 2020 and 2021 were eligible. It also would have wiped away $10,000 for eligible borrowers or $20,000 for students who received Pell Grants, a subsidy the U.S. federal government provides for students who need it to pay for college. 

Approximately 26 million borrowers had applied for forgiveness, and 16 million had been approved. However, no funds were disbursed before the Supreme Court halted the program.

Why did the Supreme Court block it?

However, several conservative states sued soon after Biden’s announcement, leaving many borrowers in limbo. 

Then on June 30, the Supreme Court voted 6-3 against the plan, with Chief Justice Jon Roberts’s conservative majority team blocking the plan.

“The Secretary’s comprehensive debt cancellation plan cannot fairly be called a waiver – it not only nullifies existing provisions, but augments and expands them dramatically,” said Roberts. 

He also added the government needs direct authorization from Congress to proceed any further.

On the day of the ruling, the Biden administration announced its Saving on a Valuable Education (SAVE) plan, which outlines alternative measures to help alleviate the debt burden for borrowers. 

Nevertheless, the Court’s decision means borrowers targeted by Biden’s plan will receive no debt relief. The monthly payment obligations paused during the Covid-19 pandemic, known as the payment moratorium, will begin again in October of this year.

A Unfair Impact on Black Borrowers

More than 70% of Black debt holders have been Pell Grant recipients and carry $25,000 more in student loans on average than their white counterparts, according to the research organization Education Data Initiative. 

A 2019 Brandeis University study found that 20 years after starting college, the typical Black borrower still owed 95% of their loan balance, while the typical white borrower owed 6%.

With degrees such as engineering averaging $40,000 to $60,000 total and computer science costing around $80,000, the high cost of education makes getting into tech industries an additional obstacle for Black people.

Black women, in particular, face this obstacle as, according to NAACP, they hold 47% more debt than white men and 27% more debt than white women.

A Jain Family Institute study additionally found that 63% of Black borrowers saw their student loan balances increase before the moratorium went into effect, coming out as the highest among all racial groups.

What has the response been?

Leading Black civil rights groups, including the NAACP, condemned the Supreme Court’s decision, arguing that it would further broaden the racial wealth gap.

A lecturer at a historically Black college, Stephanie Dunn, told Newsweek that she currently pays $700 a month toward her student debt.

Despite years of making monthly payments, a period of unemployment and being in graduate school, she confirmed that her original $88,000 loan total had ballooned to $300,000. 

“Even before the Supreme Court struck down the Biden Administration’s modest proposal of about $10,000 in debt relief for some, it was not going to help many of us,” she said.

She said there’s so little resolution precisely targeted at rectifying the predatory interest rates and weak payment plans of the 80s and 90s through the early 2000s, disproportionately affecting many first-generation and African American students.