Student Loan Debt Relief a Positive Impact to the Latinx Community
The news is out! The Student Loan Debt Relief Plan is here to help those struggling with college loans. Here is how it will impact the Latinx and POC community!
Student Loan Debt Relief Snapshot
President Biden has passed a Student Loan Relief plan for up to $20,000 for Pell Grant recipients and up to $10,000 for non-Pell Grant recipients. The current student loan extension is set to expire at the end of 2022. This relief plan aims to provide a cushion as those with student loans begin to repay them again.
In addition to forgiving some student loan debt, the plan will tackle the the price hikes from the schools and the predatory loan practices.
According to the College Board, college tuition rose 2.5 times in 2021-2022 since the 1990’s. In contrast to the sharp increase in tuition price, the Federal Pell Grants did not increase to match. This meant that student loans were still taken needed, since the Pell Grant barely covered a third of the cost! What’s worse is that many were not even able to complete their degree due to lack of funds.
Student Loan Debt Impact to Latinx and POC
So, how did the tuition increase affect the Latinx and POC community? Well, many of us are First Generation immigrants or minorities from low income households. We often navigate college without any guidance or any financial knowledge. Due to our low income, our only way to attain higher education is by drowning ourselves in college loans with the hopes that it will pay off in the end.
However, we forget about the other variables that affect the ability to repay those loans on top of the predatory interest rates. After graduation, Latinx and POC have less job opportunities compared to their white counterparts. We lack networks and often end up with a the infamous wage gap.
Similarly, coming from a low income household, puts us at a higher risk of acquiring other debt. As a result, we may have a harder time paying off our student loans. This can lead to a cycle of borrowing money and a lower credit score. This sets us back and increases the already wide wealth gap.
Positive Impact to Latinx Community
The plan is aimed to target those with more economic need. The majority of Pell Grant recipients are often minorities and therefore will have much to gain from this plan. According to the Urban Institute Study, this type of target loan forgiveness can help narrow the racial wealth gap.
This relief will not only reduce the overall loan amount but cap the monthly payments. As a result, the leftover income can greatly improve the quality of life for many. Those extra funds can be used for other debt payment, savings, or even investing. This in turn puts them on the road to financial stability.
In addition, the plan will aim to hold schools more accountable for needless tuition price hikes. It will also increase the amount of the Pell Grants. Therefore, higher education will become more accessible, especially to Latinx and POC college students. This is good news, as higher education is one of the greatest tools that will help close the wealth gap.
Overall, the current plan may not be perfect, but it is a step in the right direction. The fact that the racial wealth gap was taken into consideration shows how this plan aims to help those most in need. There are future goals to make community college free and to further increase Pell Grants. This is great for the Latinx and POC community as we struggle to catch up to become financially independent and build generational wealth.