The Reason Why HBCUs Are Canceling Student Debt

The Reason Why HBCUs Are Canceling Student Debt
portrait of Ciera Graham, Ph.D.
By Ciera Graham, Ph.D.

Published on August 27, 2021

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The rising cost of college is a national concern that has received increased attention from the Biden administration. The White House has remained vocal about college affordability, tuition-free college, and student loan cancellation, but so far little has changed.

While sweeping federal action might be lacking, historically Black colleges and universities (HBCUs), aided in part by federal COVID-19 relief funds, have taken a proactive role in alleviating the student debt burden worsened during the COVID-19 pandemic.

Colleges and universities across the country could learn from the example of HBCUs to alleviate student debt and increase equity in college recruitment, retention, and outcomes.

The Challenge of College Affordability

According to CNBC, data from 2019 indicates that the cost of college has increased by more than 25% in the last 10 years. Decreased state funding is partially responsible for tuition hikes, which leave learners carrying the financial burden.

Today's college students are forced to take on an exorbitant amount of debt to afford tuition and other fees. Tuition is the most obvious and common expense impacting students, but for many traditional colleges, other fees for amenities like the library, parking, on-campus housing, and dining contribute to the high cost of attending college.

By alleviating student debt, colleges are able to level the playing field between wealthy and low-income students.

Student debt is also associated with more debt overall. According to a 2021 study conducted by the U.S. Census Bureau, 69% of adults with student loans also have other forms of debt like medical and credit card debt.

The rising cost of tuition and fees can create additional stress for students. Excess and unpaid debt can lead to student attrition and feelings of disengagement. By alleviating student debt, colleges are able to level the playing field between wealthy and low-income students.

Increasingly, African American and Black students face excessive debt. In 2020, the average Black graduate had $7,400 more in student debt than their average white peer. The same year, Black graduates at HBCUs took on 32% more debt than peers at other types of institutions.

The social and economic outcomes for Black students with more student debt are bleak. The rising cost of college has deepened income and wealth inequality between Black and white students.

HBCUs Move to Cancel Student Debt

HBCUs have played a critical role in educating Black students, improving the social and economic conditions for them and their families, and employing Black academics. HBCUs help cultivate Black entrepreneurs who are able to open businesses and invest back in African American communities.

Studies like a 2017 Brookings report show that in cities with HBCUs, Black people earn higher than average median incomes and own businesses at higher rates. During the times of legal segregation, these institutions provided access to Black students who were excluded from white colleges.

HBCUs have also played an active role in advocating for expanded civil rights for Black Americans. It seems only fitting that they would also break ground in helping alleviate the racial wealth gap through student debt forgiveness.Black students and their families were hit especially hard by the pandemic: Black people were more likely to die from COVID-19 and receive inadequate care and treatment, and Black, Latina, and immigrant women were more likely to experience job and income loss. Existing inequities exacerbated by the pandemic, coupled with excessive student debt, have made it difficult for Black people to build economic and financial security.

Each HBCU is choosing to spend its relief money differently, but many have canceled student account balances and debt associated with tuition and campus fees.

The American Rescue Plan Act of 2021 injected $1.9 trillion into the economy to help businesses and organizations recover from the COVID-19 pandemic. Billions of dollars of the stimulus have been afforded to HBCUs.

Each HBCU is choosing to spend its relief money differently, but many have canceled student account balances and debt associated with tuition and campus fees. In July 2021, Clark Atlanta University eliminated student account balances from the last five semesters while Wilberforce University canceled all student loan debt and fines owed to the school from 2020 and 2021. Additionally, some HBCUs like Philander Smith College are using funds from private organizations and Black serving organizations like theJack and Jill Foundation to help relieve student debt.

How Can Other Institutions Learn From HBCUs?

Like HBCUs, many other institutions are also using their college relief funds to help alleviate student debt. The City University of New York (CUNY), for example, plans to wipe $125 million in student balances as a result of additional federal stimulus dollars.

Strategies such as this help with the recruitment and retention of students at colleges and universities. With the decline in enrollment that many schools have experienced due to COVID-19, alleviating student debt can be an effective tool to draw in new students and help current students remain in school.

While the economic stimulus bill is not alleviating student debt for all students, the impact of institutions' strategic spending has been felt by learners far and wide. HBCUs like Wilberforce University and Philander Smith Collegehave also bolstered private scholarships by seeking out donors, an excellent strategy for expanding a college's financial resources and capacity to support students.

The Significance of HBCUs Canceling Student Debt

Loans are one of the primary ways students pay for tuition and fees as college becomes increasingly unaffordable. Students who attend HBCUs borrow more money at a higher rate and also graduate with more debt than their peers at non HBCU institutions. The consequences of graduating with loans can be extreme.

Student debt severely limits one's ability to generate wealth, own a home, start a family, and achieve economic security even with a college degree. Moreover, student debt can also impact a student's choice and capacity to continue their education and may lead to student attrition.

Student debt severely limits one's ability to generate wealth, own a home, start a family, and achieve economic security even with a college degree.

A higher percentage of students attending HBCUs than students at other colleges come from lower-income families with less financial resources. Federal Pell Grants have been the largest source of funding for low-income students; however, contributions from the program have declined substantially since 2013. Limited financial assets coupled with the fallout of the COVID-19 pandemic have left many low-income families struggling to meet their basic needs, much less afford college.

The movement of HBCUs to cancel debt shows that they understand the lived realities of their students, who are primarily low-income and people of color. At a time when economic and financial security is precarious for many Americans, HBCUs are responding to the call to provide educational opportunities to vulnerable students. With enrollment suffering at many institutions due to the COVID-19 pandemic, HBCUs are forgiving debt to ensure they retain students.

Colleges need to tackle college unaffordability not only to remain competitive, but also to also meet the needs of a diverse, ever changing student population.

Feature Image: Caroline Brehman / Contributor / CQ-Roll Call, Inc. / Getty Images

The student debt crisis affects many college students but especially Black students, who are more likely to take out loans and struggle to pay down debt. More and more people are recognizing the value of an HBCU education. Learn about the unique benefits these institutions offer from an HBCU alum and professor. HBCUs were established to provide avenues to higher ed for Black Americans. Today, these schools continue to offer critical support and guidance.