Black Student Borrowers Are Playing Catch-Up

Biden’s student loan forgiveness plan should be understood in the context of the GI Bill’s exclusionary legacy, Melvin Hines writes.

The GI Bill, signed into law in 1944 to provide World War II veterans with funds for college and housing, helped usher in much of today’s middle class. Approximately eight million veterans took advantage of educational benefits, and by 1950 the number of U.S. citizens with a college degree had more than doubled. For the first time, millions of veterans suddenly qualified for GI-backed mortgages, and by 1955, home loans worth about $340 billion had been granted to veterans, amounting to nearly one-third of all new home loans.

There was just one issue: Black veterans were largely excluded from these benefits. Prior to passage of the GI Bill, President Franklin Roosevelt conceded to a key provision by racist Southern Democrats holding that states, and not the federal government, would determine how the GI Bill benefits would be distributed. As a result, Black people throughout the U.S. were denied access to college programs, prevented from receiving home mortgages and kept out of newly developed neighborhoods due to redlining. This wasn’t just an issue in the South. Of the 67,000 GI Bill-backed mortgages distributed in the New York area, fewer than 100 were granted to nonwhites.

The impact is still felt to this day. Just 26 percent of Black people age 25 or older have a bachelor’s degree or higher, compared to 40 percent of non-Hispanic whites. Just 43 percent of Black people own their homes, compared to 72 percent of whites. This gap in homeownership—the single largest source of wealth for most Americans—has resulted in a widening of the wealth gap between whites and Blacks from $64,000 per household in 1968 to $136,000 today. In short, by nearly every financial measure, the GI Bill made Blacks worse off today compared to their white counterparts than they were in 1950s.

As a result, just about every initiative that supports Black communities—from affirmative action to inner-city programs and even the work my organization, Upswing, does to help minorities stay in school and graduate—has been relentlessly aimed at reversing the negative effects of the GI Bill on Black communities.

Late last month, President Joe Biden announced an initiative aimed at forgiving up to $20,000 in federal student loans. The Biden administration estimates that nearly 90 percent of the intended beneficiaries make less than $75,000 per year. The announcement has been controversial, to say the least, as many commentators have complained about the fairness of the forgiveness plan.

But “fairness” is a funny term to use. For the last seven decades, Blacks have been taking on student loans to attempt to buy a chance to achieve the American dream—the same chance the GI Bill gave whites in the 1950s. Blacks take on more student loans than their white counterparts. And after graduation, the gap only grows: four years after graduating, 48 percent of Black borrowers owe more on their student loans than when they graduated, compared to 17 percent of white borrowers.

If America is serious about closing the expansive Black-white wealth gap, we must be honest about how we arrived here. Only then can we take a look at initiatives like Biden’s student loan forgiveness plan and ask not, “Is it fair?” but instead, “Is it enough?”