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How Student Loan Forgiveness Boosts Black Homeownership Rates
Young girl with cardboard box running home
According to a 2021 study, six in 10 millennials who don’t own a home say it’s because of student loan debt. National Real Estate Association.
College costs have skyrocketed over the past two decades. Average tuition fees for the 2010-11 and 2020-21 academic years According to the Education Data Initiative, public universities increased by nearly 31% and private universities increased by more than 41%. Students currently pay an average of $35,551 annually.
This debt exacerbates racial disparities in homeownership, widening decades of discriminatory lending practices, racist housing policies, and barriers to wealth for blacks and other people of color. These trends have forced students from marginalized communities to take additional financial risks in order to pursue a college degree.
For many people, loans make college possible. Over 45 million by 2020 had student loan debt, an average of $37,693 per person per Education Data Initiative. These costs have left many unable to afford the down payment on housing. Homeownership rates drop nearly 2 percentage points for every $1,000 of borrower’s student loan debt. federal reserve.
Black Americans historically have not been able to build wealth as easily as non-Black Americans, so they rely more on loans to buy big ticket items like higher education and home ownership. High student loan payments and interest rates can hinder your ability to buy a home, setting you in a cycle of inequality. In August 2022, the Biden administration announced it would forgive $10,000 in student loan debt, impacting about 43 million borrowers.
Keep reading to see how student loan forgiveness impacts black homeownership rates in the US
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Americans have over $1.7 trillion in student loan debt
Graph showing how student loan debt has ballooned since 2006
Student loan debt has nearly tripled since 2006.
Total debt continues to rise, but the growth rate is considerably slowed downThe year-over-year change in 2013 was 12.1%. Last year he was 0.31%.
The federal government has suspended federal student loan payments during the pandemic. This set the interest rate at his 0%, allowing the borrower to skip loan payments without the risk of late fees or default.this policy helped 4.7 million people We will reduce the balance, which is scheduled to expire at the end of 2022.
Black and Hispanic students more likely to have student loan debt
Chart showing student loan debt by race
According to an analysis by the Brookings Institution, black Americans Cycle of inequality When paying for higher education. Black American households fail to build wealth at the same rate as non-Black households, according to the report. It means more loan payments.
Hispanic Americans are also experiencing wealth inequality, increasing the need to take out more student loans. According to Unidos USMany Hispanic Americans are also first-generation college students, so navigating the financial aid system can be difficult.
Black Americans are less likely to own a home
Chart showing the majority of real estate assets owned by white families
Black homeownership rates (43.4%) lag far behind white Americans (72.1%), down nearly 1% since 2010. National Real Estate Association. In fact, the Gap widens today than then fair housing law Passed in 1968.
Black households also lag behind, earning just 61 cents for every dollar that comparable white households earn, according to a federal analysis. Economic Policy Research Institute Latest data from the Census Bureau. According to 2022 statistics, black Americans on average earn less and are denied a mortgage at twice the national average rate. lending tree study.
Black Americans often seek higher education to increase their income potential. Still, when student loan repayments take up a significant portion of your monthly budget, it’s hard to take on more debt.Due to student loan debt, almost Half of black Americans said they were more likely to delay home ownership.
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What Student Loan Forgiveness Means For Black People
Excited children jumping out of the box and playing with their parents in the living room
Black Americans face disparities in building wealth, and student loans exacerbate that problem. According to one study, more than half of black households with student loans have no or negative net worth, about twice as many as those without student loans. Brookings Institution analysis.
Student loan forgiveness cannot eliminate the racial wealth gap, but it can significantly reduce it. It may provide more opportunities for building intergenerational wealth.