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Many of us have been there. We didn’t pay a parking ticket or a library fine, and our college refused to release our transcript. And the lack of a transcript is no small matter. The practice of holding on to students’ transcripts prohibits them from enrolling in another college, which will need proof of courses taken, and can result in the loss of a job offer.
From an institution’s perspective, withholding a transcript is reasonable — after all, this is the leverage the institution has to collect its debts — but in practice, it amounts to holding students hostage, just for being poor. For want of a few hundred dollars, their very future is imperiled.
But imagine that a student’s debt went beyond failing to pay a library fine. What if that student dropped out of college to get a job to feed a family or themselves, leaving an unmet housing or tuition charge? That debt could prevent a student from moving on with his or her life.
A group of colleges has decided to stop holding students captive and allow them to get their lives back on track. On April 30, the Detroit Regional Chamber and three postsecondary institutions in Michigan — Henry Ford College, Oakland University, and Wayne State University — announced a new program that will forgive unpaid institutional debt among students who’ve previously attended those colleges but never earned a degree.
The debt-forgiveness program was announced at a gathering of organizations focused on improving higher education outcomes, hosted by the philanthropic Lumina Foundation. In a statement, the foundation explained that some student debt would be forgiven “if students enroll at any of the three institutions, stay current on new postsecondary financial obligations, and make progress toward their degree or certificate. Henry Ford, a community college, will forgive half of total outstanding debt, and Wayne State and Oakland, both four-year institutions, will each wipe out up to $1,500 of debt.” (The Hechinger Report receives financial support from Lumina. I served as a keynote speaker at the Lumina event.)
Fifteen hundred dollars may not seem like a lot, especially compared to the tens and even hundreds of thousands of dollars in student loans that saddle 44 million borrowers who collectively owe $1.5 trillion in debt, but for many low-income students, even something as comparatively paltry as a library fine can amount to a week’s food budget.
One such student is Kassandra Montes, a senior at Lehman College, a four-year college in the Bronx, who has to take out loans to stay in school and struggles to meet basic needs like food and shelter. Montes, who was featured in a New York Times article on food insecurity, and who took out a $5,000 loan to pay for tuition and fees, lives in a homeless shelter in Harlem as she attends classes, works two part-time jobs and budgets only $15 per week for food. Students who lack food and shelter are at greater risk for dropping out than those who have a steady home to go to, according to a new report published by The Hope Center at Temple University. Students like Montes deserve a second chance.
This new debt forgiveness program in metro Detroit, which will give a significant boost to low-income students of color, represents a higher education reform that attempts to resolve one of the core reasons behind racial disparities in postsecondary attainment: the wealth gap. Welcome though it is, the program represents only a small step on the road to financial security.
Students who don’t have the buffer of wealth can’t always weather the unpredictable blows in life that will leave a library bill unpaid. People lose jobs, get divorces, suffer from illnesses, survive natural disasters, or even drop out of college to take care of a sick relative. Wealth gives people a reserve to fall back on when the storms in life eventually come. Students without this buffer are forced to resort to loans, which further eat away at their income, whether they graduate or not.
Although Montes’ $5,000 educational loan should pay off in the long run, no student should have to go hungry, be homeless and go into debt in order to get a leg up in the future. The reason a stumble too often leads to such a big fall, however, goes beyond a simple gap in wealth; it is rooted in the legacy of slavery that still stifles opportunities for people of color.
The United States’ ignoble history of segregation, housing and employment discrimination and a broken criminal justice system has kept millions of black people from supporting their families and robbed us of opportunities to create wealth. Decades of segregation confined black people in specific neighborhoods. Mortgage lenders drew lines around these neighborhoods to indicate where not to give loans — also known as redlining — making it difficult for black families to generate wealth from housing. Black women earn just 61 cents for every dollar earned by their white male counterparts, according to analysis by the nonprofit advocacy group Equal Pay Today. Native American women and Latinas earn 58 cents and 53 cents, respectively for every dollar earned by a white male.
Wealth is a function of assets minus debt: According to the research nonprofit the Institute on Assets and Social Policy, “assets provide the tangible resources that help individuals move out of and stay of poverty.” Assets include the material goods that people own, like homes, IRAs and stocks. Debt is the amount of money that is owed. Mortgages, car loans and student loans are some of the largest sources of debt. Among different racial groups, white families have the highest levels of family wealth. The average (median) family wealth for white families is $171,000, according to the 2016 Survey of Consumer Finances published by the Federal Reserve System, the central bank of the United States. Black families’ median net worth is approximately 10 percent that of white families, at $17,600; the median net worth of Hispanic families is $20,700, roughly 12 percent of white families’ median net worth.
We should applaud the Detroit Regional Chamber, Henry Ford College, Oakland University and Wayne State University for eliminating barriers that keep low-income students in purgatory. But we have to go much farther and eliminate the biggest barrier — the student loans that are keeping many students from attaining the American Dream. Students who’ve been disenfranchised by racism and by slanted public policy shouldn’t have to go into debt to get an education to help them attain the wealth that was systematically denied their parents.
This story about debt forgiveness program was produced by The Hechinger Report, a nonprofit, independent news organization focused on inequality and innovation in education. Sign up for Hechinger’s newsletter.