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Student Debt Relief and Racial Wealth Gaps

Author

Listed:
  • Gerald E. Daniels Jr.
  • Jeffrey Galloway
  • Venoo Kakar

Abstract

The Biden-Harris Administration released a plan to cancel federal student loans for 43 million borrowers on August 24, 2022. While the Supreme Court struck down the Biden-Harris student debt relief plan on June 30, 2023, the White House is now planning to use the Higher Education Act of 1965, a federal law that governs the student loan program, to bring about relief for student borrowers. This article estimates the potential impact of broad-based student debt relief on racial and ethnic wealth gaps. On average, federal student debt potentially eligible for relief explains 3 percent of the White-Black wealth gaps, suggesting that broad-based student debt relief could significantly mitigate racial wealth inequities.

Suggested Citation

  • Gerald E. Daniels Jr. & Jeffrey Galloway & Venoo Kakar, 2024. "Student Debt Relief and Racial Wealth Gaps," AEA Papers and Proceedings, American Economic Association, vol. 114, pages 535-539, May.
    • Handle: RePEc:aea:apandp:v:114:y:2024:p:535-39
    DOI: 10.1257/pandp.20241130
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    More about this item

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • G51 - Financial Economics - - Household Finance - - - Household Savings, Borrowing, Debt, and Wealth
    • I22 - Health, Education, and Welfare - - Education - - - Educational Finance; Financial Aid
    • I23 - Health, Education, and Welfare - - Education - - - Higher Education; Research Institutions
    • J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination

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