Funded on September 1, 2021

Rising student loan debt and defaults have become a fixture in higher education research since the Great Recession of 2007-09. Student loan debt has been the largest source of non-mortgage debt owed by US households since 2010 and outstanding student debt amounted to $1.7 trillion dollars by quarter four of 2020 (“Z.1 Financial Accounts of the United States,” 2021). While average levels of student loan debt held by households have steadily increased, total student loan borrowing differs considerably across racial groups. According to the Survey of Consumer Finances, conditional mean student loan debt for White, Black, and Hispanic households was $40,516, $42,571, $34,839 in 2019, respectively, with even more pronounced differences emerging in the full distribution of student loan debt.  

This project will examine the impact of existing student debt forgiveness policies on racial wealth gaps, specifically on Black-White and Hispanic-White wealth gaps, focusing on three points:   

  1. the distribution of total student loan borrowing, default, and student debt forgiveness patterns across various racial groups, socioeconomic groups, and education levels; 

  1. the extent to which student debt forgiveness policies affect racial wealth gaps across the wealth distribution; and 

  1. an examination of these effects on financial wealth vs. housing wealth across racial groups and the wealth distribution. 

Ultimately, this work will have important implications for the ways in which programs are tailored and targeted to underrepresented groups, as well as for improving household wealth outcomes.