There is an argument that student debt cancellation will close the wealth gap because Black people hold disproportionately high monthly loan debt.
This is the opinion that National Association for the Advancement of Colored People President Derrick Johnson gives. In fact, the organization is heavily vested in the push to get President Joe Biden to move faster with total debt forgiveness.
Black students borrow for a bachelor’s degree at a rate 17 percentage points higher than their white peers.
“There are no paths forward to closing the racial wealth gap without first addressing the student loan crisis in a substantial way,” Johnson said in an interview with CNBC. He also stressed that cancellation “must be a minimum of $50,000.”
Others also look for student loan debt cancellation to close the wealth gap.
“Cancelling student debt would help close the racial wealth gap and give millions of hardworking Americans a shot at owning their first homes, starting their own businesses, and building a stronger economic future. Let’s do this, @POTUS,” Senator Elizabeth Warren tweeted.
But reparations scholar Dr. William “Sandy” Darity, a Duke University economist, shows why this isn’t the case. Darity, who co-authored the book “From Here to Equality: Reparations for Black Americans in the Twenty-First Century” with A. Kirsten Mullen, maintains that financial reparations for naive Black Americans is the only way to close the wealth gap.
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In response to Warren, Darity tweeted “Student debt cancellation is a good idea, but it will do very little to close the racial wealth gap” along with a link to an article he authored for The New York Times in 2021.
In the “The True Cost of Closing the Racial Wealth Gap” Darity wrote, “…policies like forgiving all student debt, and providing universal ‘baby bonds’ to the entire population, won’t be nearly enough. These programs are worthwhile, and I support them…While these approaches can do much good to help both the poor and the middle class, they won’t close the Black-white wealth gap.”
Student loan forgiveness will help all borrowers, not just Black loan holders. Since it won’t be targeted, it can not close the wealth gap, some argue.
Darity also tweeted, “One of the key problems with the claim that student debt cancellation will close the racial wealth gap is the broader implied assumption that B/W differences in wealth are driven by debt. But average overall white debt actually is higher than average Black overall debt.”
He continued the the complex issue of the wealth gap has to have a farther-reaching policy to close it.
“One of the key problems with the claim that student debt cancellation will close the racial wealth gap is the broader implied assumption that B/W differences in wealth are driven by debt. But average overall white debt actually is higher than average black overall debt,” he tweeted.
Reparations advocate Yvette Carnell, co-founder of American Descendants of Slavery (ADOS) chimed in and said reparations is the only path to closing the wealth gap.
“Forgiving student debt stabilizes white America. It doesn’t close the racial (lineage) wealth gap. Only reparations closes the racial wealth gap. Stop saying this,” she tweeted to Warren.
Photos: William Darity Jr. (Justin Cook, Minneapolis Fed) / NAACP President Derrick Johnson, Jan. 15, 2022, in Los Angeles (AP Photo/Richard Vogel) / Graduating students in the Class of 2016, City College of New York, June 3, 2016. (AP Photo/Bebeto Matthews)