Report: How Student Loan Debt and Forgiveness Plans Affect Atlanta’s Borrowers of Color
The racial wealth gap in America means that Black students are more likely to have student debt, borrow in higher quantities and experience greater difficulty repaying their loans. The South Has Something to Say, a new report series produced with support from the Annie E. Casey Foundation, explores this issue. Its first installment focuses on Atlanta, one of many cities where borrowers of color experience greater harm as a result of the student debt crisis.
“Reducing and preventing burdensome debt is a major pillar of the Casey Foundation’s work,” says Beadsie Woo, who serves as the Foundation’s director of Family and Youth Financial Stability. “This report offers some important insights into how borrowers of color are especially harmed by student loan debt and its side effects in Atlanta.”
Mapping Student Debt Disparities in Atlanta
The South Has Something to Say shares several key findings:
- Atlanta’s Black neighborhoods hold disproportionate student loan debt. Between 2010 and 2020, Black neighborhoods in Atlanta showed higher average student loan balances compared to predominantly white areas of the city. Between 2010 and 2018, the average student debt burden held by borrowers in majority Black ZIP codes increased from $1,500 to almost $7,000.
- The student loan payment freeze gave a lifeline to Black borrowers in Atlanta. In 2015, 20% of all households in majority Black neighborhoods were behind on student loan payments. Due to the federal government’s moratorium on student loan payments during the COVID-19 pandemic, the average rate of loan payment delinquency in these neighborhoods dropped from 19% in 2015 to 2% in 2020.
- Black borrowers in Atlanta are still struggling with debt. Although the pause on student loan payments has provided temporary relief, borrowers in Atlanta’s majority Black neighborhoods continue to hold debt that has remained constant or continues to grow.
Projecting the Benefits of Student Loan Debt Relief
In August 2022, the Biden Administration announced a plan to forgive up to $10,000 in student loan debt for Americans who make less than $125,000 annually and up to $20,000 for Pell Grant recipients with loans held by the Department of Education.
While the plan is currently being challenged before the Supreme Court — which is expected to rule on the issue in the summer of 2023 — the report examines how this proposed plan would affect Atlanta borrowers:
- Every Atlantan with student loan debt would benefit. If the Biden Administration’s plan is enacted, between 24% and 44% of borrowers in Atlanta would have their student loan debts eliminated and roughly 25% of all Atlantans would have their student loan burdens significantly reduced.
- Black borrowers in Atlanta would especially benefit in two ways:
- Borrowers in majority Black neighborhoods are more likely to fall behind on student loan payments. Because of this, any action to cancel a substantial share of student debt would strengthen their credit profiles.
- Borrowers in majority-Black ZIP codes typically hold higher debt balances than borrowers in majority-white ZIP codes. As a result, the Biden Administration’s plan would generate greater relief for these Black borrowers.
- Black borrowers would remain in debt. Even if the Administration’s plan is put into action, many Atlantans in majority Black neighborhoods would continue to carry heavy debt burdens.
The report recognizes that the Biden Administration’s proposed plan is an important first step in reducing the disproportionate burden of debt carried by borrowers of color. It also notes that more steps are necessary to fully address and ultimately eliminate the debt burden among Black borrowers in Atlanta and nationwide.
About the Series
The South Has Something to Say is a product of the Student Borrower Protection Center, a Casey Foundation grantee. It stems from the Center’s partnership with the University of California, Berkeley and a review of data gathered by the University of California Consumer Credit Panel.
Learn more about the roots of the student debt crisis and proposed solutions
