Student loan borrowers from lower-income neighborhoods applied for President Joe Biden’s student loan debt relief program at a higher rate compared to those from wealthier neighborhoods, with most applicants coming from locations where the per-capita income is under $35,000, according to a new analysis from POLITICO.
The analysis examined the ZIP codes associated with the 23.6 million applications received by the Department of Education (ED) for the relief program between Oct. 14 and Nov. 11. The analysis matched application ZIP codes with U.S. Census Bureau estimates of per-capita income, college attendance and racial demographics, as well as the results of the 2022 midterm elections, according to POLITICO.
A key finding from this analysis was that lower-income ZIP codes were overrepresented in student loan forgiveness applications. The analysis found that 98% of debt relief applications came from ZIP codes where the average income is under $75,000 and about two-thirds were from neighborhoods with an average income below $40,000. Less than 1% of the total applications came from the wealthiest ZIP codes where per-capita income is more than $100,000, according to POLITICO.
This information comes as many Republican lawmakers argue that wealthy borrowers will receive the majority of the benefits of Biden’s debt relief program. In November, Rep. Virginia Foxx (R-N.C.), chairwoman of the House Committee on Education and the Workforce, and Rep. Jason Smith (R-Mo.), sent a letter to the Office of Management and Budget over the projected cost of the debt relief program.
“Forcing the average taxpayer to foot at least a $2,500 bill for wealthy Americans’ degrees is unfair and does nothing to lower the cost of college tuition for working families,” the letter stated. “Taxpayers deserve to know if the Biden Administration took this into account when making its unilateral decisions.”
Another key finding was that applications for debt relief were more likely to come from Democratic states and congressional districts than from Republican ones, but not by that large of a margin. For instance, congressional districts won by Democrats averaged around 57,000 applications for the debt relief program, while districts won by Republicans averaged 50,000 applications.
There were about 15 million applications from ZIP codes that are majority-white neighborhoods, while about 8.6 million applications from majority non-white ZIP codes. However, POLITICO notes majority non-white neighborhoods accounted for more applications for Biden’s debt relief per capita than did majority-white ZIP codes. For instance, in Georgia, about 43% of the total population lives in ZIP codes that are majority non-white, but those areas accounted for about 54% of the student debt relief application.
That can be due to the fact that Black borrowers on average carry about $40,000 in federal student loan debt, which is $10,000 more than white borrowers. Additionally, one in four Black borrowers would see their debt cleared entirely under the administration’s plan, which cancels up to $20,000 for Pell Grant recipients, who are more than twice as likely to be Black, according to the Associated Press. POLITICO notes that the NAACP, Congressional Black Caucus and other advocates of student debt relief have argued it will help narrow the nation’s racial wealth gap.
Publication Date: 2/23/2023