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Supreme Court Student Loan Decision Will Affect Black Women Most

The fate of canceling student loans of up to $20,000 for more than 40 million borrowers is now in the hands of the Supreme Court. One group, however, stands to lose the most if the court rules against the Biden administration.

This group is black women.

“They tell us that if you get an education, you can make more money,” says Tisa Silver Kanadi, author of Borrowing While Black. “And then you find yourself in a situation where the education that was supposed to open the doors has put you in the biggest trap of your life.”

Black women carry a disproportionate amount of $1.6 trillion in federal student debt, with average debt higher than any other demographic. For example, according to an April 2022 study by The Education Trust, a nonprofit organization, black women have 43% more undergraduate debt and almost 99% more graduate student debt than their white counterparts 12 months after graduation.

The problem is complex. “Higher education has become this system to perpetuate financial inequality, when in our society it is considered to be the great equalizer,” says Phenaba Addo, author of The Unfulfilled Dream: The Student Loan Crisis Among Black Borrowers.

Black women are less likely to earn higher wages as a result of their education: According to a study by The Education Trust, college-educated black women earn, on average, 10% less than college-educated white women and 34% less than college-educated white men. education. .

“I think when we talk about student loan debt in general, we’re overlooking areas where, especially for black women, higher education doesn’t mean higher earnings,” says Brittany Williams, Senior Policy Analyst at the Graduate School. education at The Education Trust.

While Biden’s repeal would be supportive for many black women, you can get control of your student loans regardless of the Supreme Court’s ruling. “It’s not something you should be passive about,” Kanadi says. “Be proactive. Be strategic.”

Repayment based on income

Borrowers can expect new income-based repayment features, or IDRs, soon. With the changes, your monthly payments can be reduced by 50% or more and you can see your account balance being debited sooner.

This summer, the Ministry of Education also plans to enter into a one-time IDR waiver. Rejection will count more months towards the time required for forgiveness. If your loans are over 10 years old and your original balance was $12,000 or less, you may qualify for immediate forgiveness under the new rules. If your initial balance was higher but your loans are closer to 20 years old, you may still see accelerated rejection forgiveness.

Other plans for forgiveness

Public Service Loan Forgiveness

Those who work in the public service or in non-profit organizations may qualify for full loan forgiveness under the Public Service Loan Forgiveness Program or PSLF. Under the PSLF, borrowers who have made 120 qualifying payments can clear the balance of their balance.

All months are counted – even without payment – during the interest-free deferral period. And with the upcoming Department of Education rejection, you may be on your way to full forgiveness sooner than expected.

state forgiveness

Your state may have its own forgiveness program. These programs are usually tied to a degree plan or type of employment, and forgiveness amounts vary. Contact your state education department to explore options.

Employer Assistance Programs

Some jobs will help you pay off your student loans. Typically, these employers will pay a set amount on your outstanding balance each year or month. Payments can be tied to service obligations, so make sure you understand the implications of accepting any money. Contact Human Resources for more information about your company’s student loan benefits.

Grants for redemption

Some private or non-profit organizations offer grants to help borrowers pay off their student loans. These programs have different eligibility criteria and reward amounts. Check out Bold.org for a list of features.

Bankruptcy

If you’ve exhausted all your options and are still drowning in student loan debt, bankruptcy may be a good option.

“Bankruptcy is not really a financial death sentence,” says student loan bankruptcy attorney Stanley Tate. “It’s really a shortcut to debt relief.”

With student loan easing bankruptcy rules, you may have a new tool to overcome student debt. But bankruptcy is not for all borrowers right now.

“If you have loans owned by the Department of Education, just wait and see what happens” with the relief plans offered, Tate says. He adds that most federal student loan borrowers can get help from other government programs.

Refinance

Those with private student loans have fewer options for cancellation or forgiveness. However, if you have strong finances and a steady income, refinancing can help you lower your interest rate and monthly payment.

Refinancing is not a good option for those with federal student loans because you will lose any potential government forgiveness. But those with private loans are not eligible for these programs anyway. Before deciding to refinance, pre-qualify with several lenders to see which one offers you the best deal. Refinance only if it helps you save money every month or in the long run. Avoid refinancing if it means your interest rate will increase.

While understanding your student loans and knowing your options are important for debt management, Addo says the final decision requires more. “You can’t get a financial education to solve this problem,” she says. Addo is urging black women to put pressure on elected officials to find solutions. “This has been a problem created by bad policy and needs to be addressed through policy.”

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