The racial wealth gap continues to grow, and the government hasn’t made much in the way of moves to close it. White households hold a median wealth of $188,200 while the median Black household is worth $24,100, according to data compiled in the Federal Reserve’s 2019 Survey of Consumer Finances.
The American Civil Liberties Union (ACLU) recently suggested on Twitter that canceling student debt would help close the racial wealth gap.
“The student debt crisis falls heaviest on Black Americans and Black women in particular. Canceling up to $50,000 in student debt would help close the racial wealth gap and level the playing field for Black and Latinx borrowers,” the organization tweeted.
Not so fast, said reparations scholar and wealth inequality expert Dr. William “Sandy” Darity.
Darity tweeted, “Student debt forgiveness is a good idea, but it’s gaslighting to claim, persistently, that it will have much of an effect on the racial wealth gap. No need to justify it dishonestly.”
A Duke University economist, Darity recently addressed the wealth gap and student loan forgiveness head-on in an article for The New York Times.
Black Americans would gain disproportionately from student loan debt relief because they have larger average levels of higher education debt — $23,400 compared with $16,000 for white students, acknowledged Darity. But while erasing student debt would result in an average Black gain in wealth of $8,424 and a white gain of $6,560, this only translates into a reduction in the racial wealth gap of $1,864. Darity co-wrote the book “From Here to Equality: Reparations for Black Americans in the Twenty-First Century” with his wife and fellow reparations expert A. Kirsten Mullen.
“It would reduce the median gap of $54,700 by 3 percent and the mean gap of $280,300 by less than 1 percent,” he wrote.
Darity has consistently argued that the wealth gap will only close with monetary reparations.
Many on Twitter agreed with Darity’s take on student loan debt cancellation.
“Tell ‘em Darity. It’s extremely troubling to see how constantly African Americans’ economic plight is used to justify projects that don’t adequately address our lagging wealth, even AFTER it has been made clear that such proposals won’t drastically effect the racial wealth gap,” DW @Aletheia171 tweeted.
Nyhiem Way-El (Lord Abba) @RealMoor tweeted, “Only reparations will close the racial wealth gap bcuz it focuses on the WHOLE and a not a small portion of said group. Geeeesh”
Overall, white students would ultimately benefit the most from debt cancellation.
“Many people view canceling student debt as a racial justice issue that would help many Black people struggling to repay their loans — but most of the people who’d be helped are white and those with high incomes,” Inside Higher Education reported.
Student debt cancellation wouldn’t address the disparities that led Black students to have to borrow in the first place.
“Because of generations of what I call policy violence — redlining, employment discrimination — Black families have been locked out of wealth building,” Rep. Ayanna Pressley said at a recent Center for Responsible Lending forum.
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Darity broke down the reasons for the racial wealth gap in the U.S. The reason wealth is so densely concentrated in the United States is that 97 percent of white Americans’ total wealth is held by households with a net worth above the white median, he wrote. “And white households with a net worth above the national median, which is approximately $100,000, hold close to 99 percent of white wealth. Twenty-five percent of white households have a net worth in excess of $1 million, in contrast with a mere 4 percent of Black households.”
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