Report: How Student Loan Debt and Forgiveness Plans Affect Atlanta’s Borrowers of Color

The racial wealth gap in Amer­i­ca means that Black stu­dents are more like­ly to have stu­dent debt, bor­row in high­er quan­ti­ties and expe­ri­ence greater dif­fi­cul­ty repay­ing their loans. The South Has Some­thing to Say, a new report series pro­duced with sup­port from the Annie E. Casey Foun­da­tion, explores this issue. Its first install­ment focus­es on Atlanta, one of many cities where bor­row­ers of col­or expe­ri­ence greater harm as a result of the stu­dent debt crisis.

“Reduc­ing and pre­vent­ing bur­den­some debt is a major pil­lar of the Casey Foundation’s work,” says Bead­sie Woo, who serves as the Foun­da­tion’s direc­tor of Fam­i­ly and Youth Finan­cial Sta­bil­i­ty. ​“This report offers some impor­tant insights into how bor­row­ers of col­or are espe­cial­ly harmed by stu­dent loan debt and its side effects in Atlanta.”

Map­ping Stu­dent Debt Dis­par­i­ties in Atlanta

The South Has Some­thing to Say shares sev­er­al key findings:

• Atlanta’s Black neigh­bor­hoods hold dis­pro­por­tion­ate stu­dent loan debt. Between 2010 and 2020, Black neigh­bor­hoods in Atlanta showed high­er aver­age stu­dent loan bal­ances com­pared to pre­dom­i­nant­ly white areas of the city. Between 2010 and 2018, the aver­age stu­dent debt bur­den held by bor­row­ers in major­i­ty Black ZIP codes increased from $1,500 to almost $7,000.
• The stu­dent loan pay­ment freeze gave a life­line to Black bor­row­ers in Atlanta. In 2015, 20% of all house­holds in major­i­ty Black neigh­bor­hoods were behind on stu­dent loan pay­ments. Due to the fed­er­al government’s mora­to­ri­um on stu­dent loan pay­ments dur­ing the COVID-19 pan­dem­ic, the aver­age rate of loan pay­ment delin­quen­cy in these neigh­bor­hoods dropped from 19% in 2015 to 2% in 2020.
• Black bor­row­ers in Atlanta are still strug­gling with debt. Although the pause on stu­dent loan pay­ments has pro­vid­ed tem­po­rary relief, bor­row­ers in Atlanta’s major­i­ty Black neigh­bor­hoods con­tin­ue to hold debt that has remained con­stant or con­tin­ues to grow.

Pro­ject­ing the Ben­e­fits of Stu­dent Loan Debt Relief

In August 2022, the Biden Admin­is­tra­tion announced a plan to for­give up to $10,000 in stu­dent loan debt for Amer­i­cans who make less than $125,000 annu­al­ly, and up to $20,000 for Pell Grant recip­i­ents with loans held by the Depart­ment of Education.

Although the Supreme Court deter­mined that Pres­i­dent Biden had over­stepped his author­i­ty with this pro­posed relief in June of 2023, the report exam­ined how this pro­posed plan would have affect­ed Atlanta borrowers: 

• Every Atlantan with stu­dent loan debt would ben­e­fit. If the Biden Administration’s orig­i­nal plan had been enact­ed, between 24% and 44% of bor­row­ers in Atlanta would have had their stu­dent loan debts elim­i­nat­ed, and rough­ly 25% of all Atlantans would have their stu­dent loan bur­dens sig­nif­i­cant­ly reduced.
• Black bor­row­ers in Atlanta would have espe­cial­ly ben­e­fit­ted in two ways:
1. Bor­row­ers in major­i­ty-Black neigh­bor­hoods are more like­ly to fall behind on stu­dent loan pay­ments. Because of this, any action to can­cel a sub­stan­tial share of stu­dent debt would strength­en their cred­it profiles.
2. Bor­row­ers in major­i­ty-Black ZIP codes typ­i­cal­ly hold high­er debt bal­ances than bor­row­ers in major­i­ty-white ZIP codes. As a result, the Biden Administration’s plan would have gen­er­at­ed greater relief for these Black borrowers.
• Black bor­row­ers would remain in debt. Even if the Administration’s plan were put into action, many Atlantans in major­i­ty-Black neigh­bor­hoods would con­tin­ue to car­ry heavy debt burdens.

In response to the Supreme Court’s rul­ing, the Biden Admin­is­tra­tion announced that the Depart­ment of Edu­ca­tion would auto­mat­i­cal­ly for­give the fed­er­al stu­dent loan debt of over 804,000 Amer­i­cans. This relief will elim­i­nate $39 bil­lion dol­lars in debt.

In addi­tion, the Admin­is­tra­tion has also announced new actions that will pro­vide relief for exist­ing stu­dent loan debt hold­ers. This includes: 

• A new rule-mak­ing process, ini­ti­at­ed by Sec­re­tary of Edu­ca­tion Miguel Car­dona, intend­ed to cre­ate an alter­na­tive path to debt relief for as many bor­row­ers as possible.
• A more afford­able pay­ment plan from the Depart­ment of Edu­ca­tion designed to help the aver­age bor­row­er save more than $1,000 per year. The Sav­ing on a Valu­able Edu­ca­tion (SAVE) plan will cut bor­row­ers’ month­ly pay­ments in half, low­er many bor­row­ers’ month­ly pay­ments to $0 and ensure bal­ances don’t grow due to unpaid interest.
• A year­long ​“on-ramp” to debt repay­ment from Octo­ber 2023 through Sep­tem­ber 2024 for finan­cial­ly vul­ner­a­ble bor­row­ers will mean bor­row­ers are not con­sid­ered delin­quent, placed in default or referred to debt col­lec­tion agencies.

About the Series

The South Has Some­thing to Say is a prod­uct of the Stu­dent Bor­row­er Pro­tec­tion Cen­ter, a Casey Foun­da­tion grantee. It stems from the Center’s part­ner­ship with the Uni­ver­si­ty of Cal­i­for­nia, Berke­ley and a review of data gath­ered by the Uni­ver­si­ty of Cal­i­for­nia Con­sumer Cred­it Pan­el.

Learn more about the roots of the stu­dent debt cri­sis and pro­posed solutions