Report: How Student Loan Debt and Forgiveness Plans Affect Atlanta’s Borrowers of Color

Updated on August 15, 2023, and originally posted May 1, 2023, by the Annie E. Casey Foundation

Black mother sits at her kitchen counter with a pen and paper in had; her young child sits next to her coloring

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.

Although the Supreme Court deter­mined that Pres­i­dent Biden had over­stepped his author­i­ty with this pro­posed relief in June of 2023, the report exam­ined how this pro­posed plan would have affect­ed Atlanta borrowers: 

  • Every Atlantan with stu­dent loan debt would ben­e­fit. If the Biden Administration’s orig­i­nal plan had been enact­ed, between 24% and 44% of bor­row­ers in Atlanta would have had their stu­dent loan debts elim­i­nat­ed, and rough­ly 25% of all Atlantans would have their stu­dent loan bur­dens sig­nif­i­cant­ly reduced.
  • Black bor­row­ers in Atlanta would have espe­cial­ly ben­e­fit­ted in two ways:
    1. 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.
    2. 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 have gen­er­at­ed greater relief for these Black borrowers.
  • Black bor­row­ers would remain in debt. Even if the Administration’s plan were put into action, many Atlantans in major­i­ty-Black neigh­bor­hoods would con­tin­ue to car­ry heavy debt burdens.

In response to the Supreme Court’s rul­ing, the Biden Admin­is­tra­tion announced that the Depart­ment of Edu­ca­tion would auto­mat­i­cal­ly for­give the fed­er­al stu­dent loan debt of over 804,000 Amer­i­cans. This relief will elim­i­nate $39 bil­lion dol­lars in debt.

In addi­tion, the Admin­is­tra­tion has also announced new actions that will pro­vide relief for exist­ing stu­dent loan debt hold­ers. This includes: 

  • A new rule-mak­ing process, ini­ti­at­ed by Sec­re­tary of Edu­ca­tion Miguel Car­dona, intend­ed to cre­ate an alter­na­tive path to debt relief for as many bor­row­ers as possible.
  • A more afford­able pay­ment plan from the Depart­ment of Edu­ca­tion designed to help the aver­age bor­row­er save more than $1,000 per year. The Sav­ing on a Valu­able Edu­ca­tion (SAVE) plan will cut bor­row­ers’ month­ly pay­ments in half, low­er many bor­row­ers’ month­ly pay­ments to $0 and ensure bal­ances don’t grow due to unpaid interest.
  • A year­long on-ramp” to debt repay­ment from Octo­ber 2023 through Sep­tem­ber 2024 for finan­cial­ly vul­ner­a­ble bor­row­ers will mean bor­row­ers are not con­sid­ered delin­quent, placed in default or referred to debt col­lec­tion agencies.

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

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