Cancelling Federal Student Debt is a Tool for Gender and Racial Justice

By Emily Hirtle, policy program assistant

In the discourse surrounding student debt cancellation, some pundits and lawmakers have consistently missed the mark on the benefits this policy will bring. Too many have ignored the very serious ways that student debt is a disproportionate burden on women borrowers, and Black women with student debt in particular. The toxic combination of the racial wealth gap and ongoing gender pay disparity makes cancelling student debt a consumer finance priority[i]and a gender and racial justice tool. That’s why AFR has joined with hundreds of organizations around the country and scores of members of Congress to call for meaningful student debt cancellation.

Student loan debt and workplace discrimination do not exist in vacuums. When we consider the gender wage gap,[ii] we see that systemic income discrimination makes it disproportionately difficult for women, especially women of color, to pay off student debt. Women hold nearly two-thirds of student debt in the United States, totaling close to $929 billion.[iii] The average Black woman borrows $37,558 in student loans, and the average white woman borrows $31,346, compared to the average white man, who borrows $29,862. Women take two years longer than men to repay student debt and are more likely to face an inability to meet their essential expenses as they do.[iv] In 2019, women composed more than half of the U.S. college-educated labor force[v], but women make up 58% of the low wage workforce and 69% of the lowest wage workforce.[vi] 65% of respondents in the 2015 U.S. Transgender Survey had either some college or a bachelor’s degree, yet respondents were overrepresented in the lowest income brackets.[vii] Social workers, the overwhelming majority of whom are women, on average have between $68,000-$76,000 in student debt.[viii] Yet more than 60% of social workers earn between $35,000 and $59,000 annually.[ix] Of all American student debt, over 90% is money borrowed from the federal government.[x] Cancelling federal student debt would help to lessen these burdens worsened by pay discrimination.

Women also face wealth disparities that inhibit their ability to pay off student debt. Families with daughters are statistically less likely to save for their child’s college education.[xi] Women on average own $0.32 to a man’s dollar in wealth, and owe more credit card, vehicle, and mortgage debt than men.[xii] Black and Hispanic women are intergenerationally hindered in wealth, as the median white family has nearly nine times the net worth of the median Black family and of the median Hispanic family.[xiii] Working women who are parents are less likely to be hired for jobs, less likely to be perceived as competent at work, and more likely to face income discrimination in a phenomenon called the “Motherhood Penalty.”[xiv] For student parents, 71% of whom are women,[xv] the costs of childcare, and increased rent, grocery, and medical expenses accumulate. Black students with children hold more student loan debt than any other group.[xvi] Ending the offset of child tax credits for those in default on student loans is an economic justice priority.[xvii]

In a recent Congressional hearing examining the racial wealth gap, Professor Darrick Hamilton testified that, “we need a new industrial and trade policy that centers workers, both domestically and abroad, coupled with an explicitly antiracist, anti-sexist economic rights frame to promote our shared prosperity,” citing cancellation of student debt as one of these policies.[xviii] Cancelling student debt begins to address the history of systemic discrimination and racist policies that have created disparities in wealth across race and gender lines.[xix] For women of color in particular, gender and racial discrimination interact and create exacerbated harm that is more damaging than the sum of its parts.[xx] Economic policy that mitigates this damage advocates, to use Dr. Hamilton’s words, for our shared prosperity. Cancelling student debt is also more possible than ever, since the American Rescue Plan included a provision[xxi] which ensures that all types of student loan cancellation will not be taxed as income. Reforming student lending is economic justice, is gender justice, is anti-racism, and it is the way forward.

[i]https://ourfinancialsecurity.org/wp-content/uploads/2020/12/AFR-Consumer-Finance-Priorities-12.15.20.pdf

[ii]https://www.americanprogress.org/issues/women/reports/2020/03/24/482141/quick-facts-gender-wage-gap/.

[iii] https://www.aauw.org/resources/article/fast-facts-student-debt/.

[iv] https://www.aauw.org/app/uploads/2020/03/DeeperinDebt-nsa.pdf

[v]https://www.pewresearch.org/fact-tank/2019/06/20/u-s-women-near-milestone-in-the-college-educated-labor-force/.

[vi] (Black women compose 11% of the lowest wage workforce and 6% of the overall workforce, Asian and Pacific Islander women compose 4% of the lowest wage workforce and 3% of the overall workforce, Latine women compose 14% of the lowest wage workforce and 7% of the overall workforce, and Native women compose 0% of the lowest wage workforce, 1% the low wage workforce, and 1% of the overall workforce) https://dev.devurl.info/nwlc2.org/resources/low-wage-jobs-are-womens-jobs-the-overrepresentation-of-women-in-low-wage-work/.

[vii] https://transequality.org/sites/default/files/docs/usts/USTS-Full-Report-Dec17.pdf

[viii] (Statistics are for those with a Masters of Social Work degree)

https://www.cswe.org/CSWE/media/Workforce-Study/The-Social-Work-Profession-Findings-from-Three-Years-of-Surveys-of-New-Social-Workers-Dec-2020.pdf

https://cswe.org/getattachment/Research-Statistics/2019-Annual-Statistics-on-Social-Work-Education-in-the-United-States-Final-(1).pdf.aspx

[ix] https://www.socialworkers.org/LinkClick.aspx?fileticket=KPdZqqY60t4%3d&portalid=0

[x] https://educationdata.org/student-loan-debt-statistics.

[xi] https://www.insidehighered.com/quicktakes/2017/09/25/parents-save-more-sons-daughters.

[xii] https://assetfunders.org/wp-content/uploads/Women_Wealth_-Insights_Grantmakers_brief_15.pdf

[xiii] https://www.brookings.edu/blog/up-front/2020/02/27/examining-the-black-white-wealth-gap/.

[xiv] https://www.nytimes.com/2014/09/07/upshot/a-child-helps-your-career-if-youre-a-man.html.

[xv] https://nwlc.org/wp-content/uploads/2020/04/COVID-Stimulus-and-Higher-Ed-Factsheet.pdf

[xvi]https://iwpr.org/media/press-hits/opinion-why-black-student-parents-are-at-the-epicenter-of-the-student-debt-crisis-and-what-we-can-do-about-it/.

[xvii]https://ourfinancialsecurity.org/wp-content/uploads/2020/12/AFR-Consumer-Finance-Priorities-12.15.20.pdf

[xviii] https://www.bgov.com/core/news/#!/articles/QPIJME8JMDC0.

[xix] https://www.nytimes.com/2021/02/01/opinion/student-debt-cancellation-biden.html.

[xx] https://time.com/5786710/kimberle-crenshaw-intersectionality/.

[xxi]https://www.menendez.senate.gov/newsroom/press/menendez-warren-bill-to-make-student-loan-relief-tax-free-passes-as-part-of-covid-relief-package-clearing-hurdle-for-broad-loan-forgiveness