Schumer, Warren Student Loan Debt Disparity
In addition, Warren imprecisely stated that his debt cancellation plan “would help reduce the wealth gap between blacks and whites by 28 points for African Americans and a similar number for Latinos. “. Another 2019 analysis According to the Brandeis researchers, the differences in racial wealth among borrowing households would be reduced by about that much. The reduction in overall wealth gaps for all households would be much smaller.
To February 4 press conference, Schumer and Warren were joined by Democratic representatives. Ayanna Pressley, Alma Adams, Ilhan Omar and Mondaire Jones in reintroducing a bicameral resolution lobby for the new president to use his power under the higher education law to deal with the student loan problem.
Student debt inequality
A study published in September 2019 by the Institute on Assets and Social Policy at Brandeis University found that, respectively, 49% and 26% of white and black student borrowers had repaid their consolidation loans after 20 years.
But Schumer and Warren incorrectly relayed the study’s findings on the percentage of white and black loan recipients who were still in debt after this period.
Schumer, February 4: And there’s an amazing statistic that shows that something like, and Elizabeth will give me the exact numbers, she knows this stuff inside out. But something like only white student debt holders – only 15% have debt after 10 years, right?
Warren: It is after 20 years, only 5%.
Schumer: And after 20 years, only 5% of whites have student debt, but 95% of African Americans have debt.
This is not what the IASP reports.
His study examined the student debt of a cohort of undergraduate students who were followed for 20 years after entering college in 1995-1996. The authors concluded, “Black students are more likely than their white peers to get into debt, take out larger loans, and get into debt decades after pursuing higher education.”
Specifically, they found: “Two decades after starting their studies, the median black student borrower has $ 18,500 in loans remaining, while the median white borrower only has $ 1,000 in loans. In other words, in 20 years, the median debt of white student borrowers has been reduced by 94% – almost half of them with no student debt – while black borrowers at the median still owe 95%. % of their total cumulative borrowings.
The amount of debt still owed – not the percentage of people in debt – is what the senators intended to mention, the offices of Schumer and Warren told FactCheck.org.
Regarding the disparity between people without debt within 20 years, the report states: “At that time, almost half of white borrowers were free of student debt (49%), while only a quarter of borrowers blacks were able to reimburse everything. of their loans (26%). ”
So, Schumer and Warren would have been correct to say that after 20 years, 51% of white borrowers have student debt while 74% of African American borrowers have it, or that white borrowers have reduced their median debt by 94%. while black borrowers reduced their debt. median debt of 5%.
Later in the press conference, Warren said that their plan to “write off student loan debt would help close the 28-point black-white wealth gap for African Americans and a similar number for Latinos.”
Warren’s office told us his claim was based on a April 2019 Analysis of a previous proposal to write off up to $ 50,000 in student debt for households earning less than $ 100,000.
According to a letter the authors sent to Warren: “The closing of the projected relative wealth gap and the wealth gains among borrowing households only would be great. Among borrowing households, the relative wealth gap between whites and blacks would be reduced dramatically, from 2.5% to 27.6%, and the wealth gap between whites and Latinos would narrow by 53 , 7% to 81.0% ”, these figures refer to the percentage of median wealth of white households owned by these racial groups. “Wealth gains among black borrowing households are projected to be $ 15,700 and over $ 27,000 for Latino households.”
That would be a 25.1 percentage point reduction in the wealth gap between black and white borrowing households, and a 27.3 percentage point reduction in the wealth gap between Latino and white borrowing households.
Overall, however, the racial wealth differentials would not change much, according to the analysis.
“Politics also has a moderately positive effect on the relative and absolute racial wealth gap,” the authors wrote. “The wealth of black and Latino households represents 10.2% and 12.2% of the wealth of white households at the median. The proposed policy would moderately increase these proportions to 14% for both groups. For both groups, the absolute wealth gaps relative to white households would narrow slightly (by $ 5,121 for black households and $ 1,660 for Latino households). ”
This means that at the median, the wealth gap for all households would be reduced by 3.8 percentage points for Blacks and 1.8 percentage points for Latinos.
“If the President forgave up to $ 50,000 in student loan debt, as Leader Schumer and I have demanded, it would reduce the racial wealth gap among those with student loan debt by about 25 percentage points.” She said.
His office told us that his press conference remarks were intended to highlight the impact of debt cancellation on black and Latino borrowers.
In an email, a spokesperson for Warren said: “As Senator Warren has repeatedly said and repeated at this event, student loan debt is disproportionately crushing black and Latino borrowers and that reality is. supported by an avalanche of The data and the individual experiences of millions of borrowers. Canceling up to $ 50,000 in student debt would reduce the wealth gap between black and white borrowers by 25 points and for Latino borrowers by 27 points and increase the overall wealth of blacks, including non-borrowers, by up to 40 percent – it would change the lives of tens of millions of Americans.
That 40% figure comes from an August report from the Roosevelt Institute, which said: “[O]Overall black wealth is also expected to increase significantly in relative terms (up to an increase of nearly 40% at the highest modeled cancellation amounts), while the relative impact on average white wealth remains modest. The highest debt forgiveness studied was $ 50,000.
“Considering the many benefits that wealth confers in the contemporary American context, the substantial increase in black net worth is a very significant positive contribution from student debt cancellation, a potentially transformative contribution for black families in as a whole, ”the report concludes. “As a wealth reduction tool inequality Specifically, however, estimates show that canceling student debt alone is not a sufficient approach. … However, we still believe that there are good reasons to ask for the cancellation of student debt for reasons of racial equity.
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