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Supreme Court’s Decision on Student Loans: What Happens Now to Black Borrowers?

Supreme Court’s Decision on Student Loans: What Happens Now to Black Borrowers?

The Supreme Court has invalidated President Joe Biden’s student loan debt relief plan, meaning the long-delayed proposal intended to fulfill a campaign promise will not go into effect. The justices, divided 6-3 on political lines, rejected the Biden administration’s arguments that the plan was lawful under a 2003 law called the Higher Education Relief Opportunities for Students Act, or HEROES Act. The law says the government can provide relief to recipients of student loans when there is a “national emergency,” allowing it to act to ensure people are not in “a worse position financially” as a result of the emergency.

Biden said the ruling was disappointing and vowed to take additional steps to relieve the financial burden on those holding student loan debt. “I will stop at nothing to find other ways to deliver relief to hard-working middle-class families,” he said. “My administration will continue to work to bring the promise of higher education to every American.”

Biden has been talking a good game for quite a while now, and we have to ask ourselves why we’ve been so supportive of him. It could be because he was President Obama’s right hand, which, for some, gave him an automatic stamp of approval. Or, it could be because in the 2020 election he was the lesser of two evils, which caused us to be more receptive to the storyline he was feeding us. Biden has always hooked us in, but he has a long history of being disconnected on the issues of race and economic development in the Black community.

Biden won 92 percent of the Black vote in 2020, and he needs just as much to win re-election next year. But the reality is that he hasn’t honored the current soil or done the real work to fulfill promises that he made. The truth is, he’s made no difference in Black people’s lives.

Student loan debt has been the culprit for making the racial wealth gap wider over the past few decades. Black families had 25 cents for every dollar of white family wealth, according to the Federal Reserve Bank of St. Louis. Because Black families have less wealth, their children typically need to borrow more for their education. Nearly 85 percent of Black students graduate with their bachelor’s degree holding student debt, compared to nearly 70 percent of white bachelor’s degree recipients.

Because of historic racial and economic inequities, Black student loan borrowers struggle to repay their debt more than their white peers. Without student loan forgiveness, these challenges will only get worse.

Biden’s Secretary of Education Miguel Cardona called out Republicans by name for their hypocrisy on student loan forgiveness and for accepting “millions of dollars” for their businesses through COVID-era loans. “It’s outrageous to me that Republicans in Congress and state offices fought so hard against a program that would have helped millions of their own constituents,” Cardona said.

I had the opportunity to attend a virtual White House briefing with Cardona, Under Secretary of Education James Kvaal, and Deputy Director of the White House National Economic Council Bharat Ramamurti to discuss the Supreme Court’s decision and what happens now.

The administration has three immediate focal points.

  • First, under an alternative authority, the Higher Education Act, they will seek to provide debt relief to as many borrowers as possible as quickly as possible. The first step is a public hearing to take place later this month that will be in partnership with the public’s opinion.
  • Second, with loan repayments beginning in the fall, they are focused on the most vulnerable borrowers who may not be able to make their payments. It’s a 12-month on-ramp period in which payments will be due and interest will continue to be accrue. However, if a borrower misses a payment or two, they will not be put into delinquency, go into default, or be reported to a credit agency.
  • Third, they are rolling out an income-based repayment plan which they call “extraordinarily generous” plan for lower income and middle-class borrowers. Under this plan, those who had been making significant monthly payments before will be paying substantially less and, in some cases, nothing at all. These borrowers would also still qualify to have their loans forgiven under any new plan.

Honestly, I didn’t hear anything hopeful within this briefing. It’s more of the same, and these are not permanent solutions. The alternative plan they are aligning with now is from 1965. I don’t understand why they continue to force a square into a circle.

Student debt as a means of running a mass higher education system dependent on tuition has failed. The income-based plan, in particular, will not work in my opinion. As student loan balances escalate, repayment has become increasingly difficult. The solution for student loan default has been complex, including refinancing defaulted loans with loans that are not yet in default. Perhaps, they believe the answer is to simply reduce required payments to a give back a percentage of disposable income. What I see is converting the short-term problem of delinquency into a long-term problem of nonrepayment.

I believe that Black voters are just tired of being tired; tired of being disappointed whenever our issues are never addressed. The seeds always seem to get planted — to pacify us — but the soil is never tended to. Biden has been pandering to us for years, especially when it’s time to vote. His pledge to achieve his first-term promises have forced most of us into frustration because those promises have fallen by the wayside. The fact that he will not directly and progressively address this student debt issue is a disgrace. When things don’t go according to what you said publicly, Joe, you can’t just sweep them under the rug and think we’ll forget.

Canceling student loans completely will grow the economy. Student debt changes how Black households decide where to live, what type of career to have, and whether to start a family or a business. Biden has to create a progressive plan that will cancel student loan debt and not just temporarily remediate it.

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