In 2018, Aaricka Washington took out $100,000 in student loans.
The money covered a master’s degree and living expenses for 10-month journalism program at Columbia University. It was Washington’s first experience with student loans: She’d received an income-based scholarship to attend Indiana University for free as an undergraduate student. But after graduating, she felt pressured to get a master’s degree from a prestigious school to land a higher-paying job.
The result was a mountain of debt that heavily eclipses the $10,000 she’ll gain in forgiveness from President Joe Biden’s new student loan plan. Like many other Black borrowers, Washington says she feels left behind.
“This is just a drop in the bucket for me,” Washington, a 30-year-old associate editor at nonprofit media outlet LAist, tells CNBC Make It. “There’s nobody in my family that gave me thousands of dollars for me to go to school. I had to do that on my own.”
Aaricka Washington, 30, took loans to cover a master’s program at Columbia University. She says President Biden’s student loan forgiveness plan is “a drop in the bucket for me.”
Courtesy of Aaricka Washington
Black students and graduates take out more student loans than the average white borrower, and it’s harder for them to pay their loans back. Four years after graduation, the average Black borrower owes $53,000, while the average white borrower owes $28,000, according to the Brookings Institute.
After that same four-year span, 48% of Black students owe an average of 12.5% more than they initially borrowed, while 83% of white students owe 12% less, according to the Education Data Initiative.
Statistics like that lead some experts to say that Black borrowers specifically need more than $10,000 in loan forgiveness. Andre Perry, a scholar-in-residence at American University who specializes in race, structural inequality, and education, says Biden’s announcement is a promising start to fixing the student loan debt crisis.
But, he says, it overlooks borrowers whose ability to buy a home or start a family are held back by student loans — even if they earn relatively large paychecks.
“It misses the low-wealth individuals who are now high income,” Perry says. “There are lots of people who started off poor and now they’re middle class. But they are still saddled with debt.”
Why it’s often harder for Black borrowers to repay student loans
Perry says annual salary is a misleading way to gauge how easily someone can pay back a student loan. Instead, he focuses on overall wealth.
That’s largely because family money can often make the difference between choosing a fixed-rate loan repayment plan and a graduated repayment plan when you’re fresh out of college.
Take income-based …….