Black women have not recovered financially from the pandemic and are struggling to repay their student loans

COVID-19 fueled unemployment and the student debt crisis are disproportionately impacting women of color.

Washington, DC — The COVID-19 pandemic has exacerbated gender disparities and left millions of women in dire financial straits. Its disproportionate impact on black women and other women of color has reduced their ability to pay off their outstanding student debt, according to a new report from the Center for Responsible Lending (CRL). The research studied focus groups with women who lost their jobs during the pandemic.

“We already knew that women of color bore the brunt of financial inequality. They have higher student loan balances and have to pay higher interest. Due to persistent wage disparities and little to no generational wealth, women of color have fewer opportunities to pursue a debt-free education or weather an economic or personal crisis,” said CRL researcher Sunny Glottmann. “This report confirms that women, especially women of color, continue to struggle with their finances and student loan repayments even as the economy begins to rebound.”

“Women carry about two-thirds of the $1.7 trillion in federal student debt, with black women more than twice as likely as white men to owe more than $50,000 in undergraduate student debt” , Glottmann said. “Payment pauses are a temporary solution and do not solve long-standing problems within the higher education and financial systems. The only way to bring real and meaningful relief is to cancel $50,000 in debt and reform our education system.

The report painted a bleak picture for women today and as they continue their recovery efforts in the future. Key findings include:

• Due to increased childcare responsibilities, as well as the high-contact, low-wage nature of many women’s occupations, women of color and women who could not work remotely today have less job security than before the pandemic.

• Economic gains made through 2021 have not been shared equally among racial groups. Women of color continue to struggle to afford necessities such as food and housing.

• The student loan debt burden remains at staggering levels, despite the pause in payments. Black women and Latino borrowers typically have higher student loan balances than white women, making repayment more difficult.

• Although focus group participants found the pause in student loan payments helpful, they were concerned about their ability to resume paying once payments resumed.

• Due to their difficulty repaying their student loans, women are reluctant to take on more debt for themselves or their children.

CRL Policy Recommendations:

• Cancelation : Offering blanket student debt forgiveness of $50,000 per borrower, which would stimulate the economy, create new jobs, increase GDP and help close the racial wealth gap.

• Retroactive IDR Waiver: Implement a retroactive income-based repayment (IDR) waiver, which would help millions of borrowers who have spent time in default and who are most affected by for-profit predatory colleges, economic downturns and crises personnel who require an exit from their place of work.

• Improved collection and monitoring of relevant data: Improve the collection and tracking of civil service IDR and loan forgiveness data that could be used to track eligible payments and older loans that are at higher risk of payment tracking errors and make this data accessible to the public. This will allow researchers to identify problems in real time and help borrowers track their progress.

• Invest in debt-free education pathways for women of color: Women of color have suffered the worst long-term financial impacts of the pandemic and have historically had fewer pathways to debt-free post-secondary education. Federal and state governments need to invest more in public and private historically black colleges and universities (HBCUs). The federal government should also double the Pell Grant, provide more internship opportunities for HBCU students, and award more federal contracts for research to HBCUs.

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