A growing body of research suggests that African Americans are bearing the brunt of the student debt burden, as they are more likely than other groups to borrow for college and fall behind on payments. It goes to reason that a sweeping overhaul of college pricing, be it the elimination of tuition at public universities or reduction of interest rates on student loans, would have the greatest impact on African American students. And just who would usher in such a change? Sen. Bernie Sanders of Vermont.
That’s the premise of a new academic paper that touts the Democratic presidential candidate’s proposal of free tuition for everyone attending state colleges and universities. The plan, introduced as legislation in May, would knock out undergraduate tuition at public institutions and expand work-study programs to help students at private universities. It would also cut interest rates on federal student loans to stop the government from profiting off lending to young people. Sanders’ campaign did not respond to requests for comment on the paper.
“A program like Sanders’s would ensure that blacks are less susceptible to getting caught up in a debt trap,” said Darrick Hamilton, associate professor of economics and urban policy at the New School, who co-authored the paper with William Darity Jr. at Duke University and Mark Paul at the University of Massachusetts in Amherst. While Hamilton said he is a Sanders supporter, Darity and Paul say they have not made up their minds yet.
The authors say Sanders’s proposed interest rate reduction would save the average black bachelor’s degree holder $8,334 over the duration of their loan, a calculation derived from National Center for Education Statistics data on the average debt load and duration of repayment, which stands at roughly 21 years. Four out of five black graduates from public universities take out loans, compared with less than two-thirds of white graduates, according to liberal think tank Demos. Black students who borrow leave college with more debt than their peers.
To be sure, Democratic presidential candidate Hillary Clinton’s college affordability plan, which the paper does not review, would also let borrowers lower the interest rate on their federal student loans to save money, a proposal championed by progressive leader Sen. Elizabeth Warren (D-Mass.). The authors say Clinton’s plan fails to go far enough to reshape the vision for higher education. Clinton’s campaign declined to comment on the paper.
“There is a conceptual issue of what we view as the basic rights of citizenship in the United States. The Sanders position is everyone should have a right to higher education, just as everyone should have the right to decent medical care,” said Darity, director of the Samuel DuBois Cook Center on Social Equity at Duke University. “If you view education as something everybody should have, then you want to take the price tag for individual families out of it all together.”
Clinton has derided Sanders’s college proposal by saying taxpayers should not foot the bill for wealthy students, but instead use resources to make sure low-income students can graduate without tremendous debt. It’s an argument supported by Johnny C. Taylor Jr., the president of the Thurgood Marshall College Fund, which helps students at historically black institutions — predominantly those in the public sector.
“Why should my child, as someone whose father is a lawyer, have free education, when there is absolutely no need?” said Taylor, who says he isn’t ready to back any candidate at this point. “If you have a limited and finite amount of resources, let’s put it toward the people who need it.”
Darity contends that there is a range of families in the middle of the income distribution who would receive tremendous relief under Sanders’s plan because the cost of college has also become a barrier for them. What’s more, Paul argues that Sanders’s proposal to pay for much of the plan by imposing a tax on transactions by hedge funds, investment houses and other Wall Street firms could offset the financial benefit to wealthy families.
“The financial transaction tax is a way to have a progressive tax to pay for a universal program. The concern that wealthier families won’t pay their fair share, well the way that this is funded through a progressive tax would be falling on wealthy families disproportionally,” Paul said.
One of the biggest benefits of lowering the cost of college is the potential to entice more students to attend. The paper supposes that if the share of African Americans completing college was the same as for whites, then there would be an additional 331,034 African Americans with bachelor’s degrees this year, based on federal data. The number would be closer to 250,075 if you only counted black students who reported leaving school for financial reasons. Add in black graduates with associate degrees, and the Sanders education plan could produce close to a half-million more African Americans with degrees, the paper said.
And more graduates ultimately means more people with higher earnings potential. Using Bureau of Labor Statistics data, the authors determined that African Americans with bachelor’s degrees earn an additional $19,136 a year more than those with just some college courses and no degree. Each college graduate with a four-year degree earns on average an extra $765,440 over a 40-year career. Increasing the number of college graduates by lowering financial barriers could cumulatively raise African American incomes by over $5 billion among the current population of students, the authors say.
Having a degree has opened up a world of financial opportunities for African Americans. A study from the Federal Reserve Bank of St. Louis found the median income of African American graduates in 2013 was at least twice as high, and the median family wealth — retirement accounts and homes — was nearly four times as that of blacks without degrees.
Still, African American graduates suffer greater losses of wealth than their less-educated counterparts. Median wealth declined by about 56 percent between 1992 and 2013 among college-educated African Americans versus 3.8 percent among African Americans without degrees, who may have had less to lose. By comparison, the median net worth of white graduates soared 86 percent in the two decades ending 2013, while whites without degrees lost 11 percent of their wealth.
Enduring structural inequality has made it difficult for even black graduates to narrow the racial wealth gap. While an affordable education, one that does not come with tens of thousands of dollars of debt, could be helpful, it is not enough to undo generations of disparity.
“The college tuition plan might not lead to a huge value added in the wealth differences between blacks and whites, but what it can do is not exacerbate the wealth gap because blacks are more vulnerable to things like student debt,” Hamilton said. “Its impact on the black-white wealth gap is somewhat tenuous. Its impact on overall improvement of wealth? Well, that could have an effect. Not being burdened with debt would allow blacks to have less wealth slippage.”
Another key criticism of Sanders’s plan from the Clinton camp is the lack of support for historically black colleges and universities, a charge the campaign drudged up when the senator from Vermont made the rounds at several of those institutions ahead of the South Carolina primary. The paper contends that since three-quarters of students enrolled in HBCUs attend public ones, such as Morgan State University and North Carolina A&T State University, Sanders’s plan would cover tuition for 230,000 students.
Taylor of the Thurgood Marshall College Fund argues, “HBCUs are largely in the south — Mississippi, Alabama, Georgia. If you think for one second they’re going for this one, you’re wrong. It’s not practical. If the federal government said they’re going to pay for it, that’s one thing. But if you’re saying your plan relies on contribution and participation by the state, this is already on shaky ground.”
States under Sanders’s plan — at an estimated $70 billion per year — would have to put up $1 for every $2 the federal government ponies up, shifting more of the cost of public higher education to Washington. To qualify for federal funding, states would need to maintain spending on their higher education systems, academic instruction and need-based financial aid.
Similarly, Clinton’s plan, dubbed the New College Compact, would need states to sign on for students to get the most out of the proposal. The heart of that plan is an incentive program that would provide money to states that guarantee “no-loan” tuition at four-year public universities and community colleges. States that enroll a high number of low- and middle-income students would receive more money, as would those that work with schools to reduce living expenses.
The problem is that state investment rises and falls in line with the economy, meaning states slash higher education budgets during recessions and may never fully make up for the loss. Some states may be enticed by the promise of federal aid, others may continue to treat higher education as a discretionary expense.
And while both Clinton and Sanders’s plans would address affordability, neither has much to say about how to make sure students are sufficiently prepared for the rigors of college, Taylor said.
“If we don’t do a better job of preparing students in the K-12 system, we’re going to have a significant problem improving the completion rate,” he said. “No one is having a conversation around K-12 preparation. Both programs seem to totally miss that.”
Darity said, “I’m never entirely sure whether the issue is whether students are adequately prepared or whether they’re subjected to discriminatory treatment once they get into school, but those are problems that require a separate strategy. We are nevertheless better off if we give more people the opportunity to go.”
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