Income-based repayment plans inflate black student debt by accumulating unpaid interest

Evidence

Income-based repayment, which black college graduates use nearly twice as much as their white counterparts, also plays a role. Income-based repayment reduces the amount borrowers are legally obligated to pay, based on their income. But, as with graduate school deferrals, the unpaid balance accumulates interest and increases the overall outstanding debt. Both of these programs were created with the best of intentions, but both are leading to ever-increasing black student debt. — Dorothy A. Brown, The Whiteness of Wealth, 310

Categorization

Category: Causal Relationships

• XREF: Slots into the reader’s goal: a concrete race-neutral mechanism (income-based repayment) that widens the gap via interest accrual.

Related

• Income-based repayment grows black borrowers’ total debt through accumulating interest. (similarity 0.96)
• Student-loan deferral programs compound debt by capitalizing unpaid interest (similarity 0.89)
• Income-based student debt relief misses wealthier black families with heavy debt (similarity 0.84)
• Black graduates carry more student debt that worsens even among wealthy families (similarity 0.82)
• The tax system’s college financing incentives benefit whites and enlarge the racial wealth gap (similarity 0.82)
• Blanket loan forgiveness cannot reduce the racial wealth gap (similarity 0.80)
• The $2,500 student loan cap denies a deduction to higher-debt black graduates (similarity 0.80)
• Income-based relief misses blacks because income does not track wealth. (similarity 0.79)
• Student loan forgiveness must be tax-free and cover parents’ loans to help blacks (similarity 0.79)
• By age thirty-five student debt explains a quarter of the black-white wealth gap. (similarity 0.79)
• Blanket student loan forgiveness would not narrow the racial wealth gap. (similarity 0.78)