Will canceling student debt close the wealth gap? Reparations specialist Dr. Sandy Darity vs. NAACP’s Derrick Johnson

There is an argument that canceling student debt will close the wealth gap because black people have disproportionately high monthly loan debt.

That’s the opinion of the president of the National Association for the Advancement of Colored People, Derrick Johnson. In fact, the organization is heavily invested in getting President Joe Biden to act faster with full debt forgiveness.

Black students borrow for a bachelor’s degree at a rate 17 percentage points more than their white peers.

“There’s no way forward to close the racial wealth gap without first substantially addressing the student loan crisis,” Johnson said in an interview with CNBC. He also pointed out that the cancellation “must be a minimum of $50,000.”

Others are also seeking student loan debt forgiveness to close the wealth gap.

“Cancelling student debt would help close the racial wealth gap and give millions of hard-working Americans a chance to own their first home, start their own business, and build a stronger economic future. the, @POTUS,” tweeted Senator Elizabeth Warren.

But reparations expert Dr. William “Sandy” Darity, an economist at Duke University, shows why that’s not the case. Darity, co-author of the book “From Here to Equality: Reparations for Black Americans in the Twenty-First Century” with A. Kirsten Mullen, argues that financial reparations for naïve Black Americans is the only way to close the gap in wealth.

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In response to Warren, Darity tweeted “Student debt forgiveness is a great idea, but it will do very little to close the racial wealth gap” with a link to an article he wrote for The New York Times in 2021.

In “The True Cost of Closing the Racial Wealth Gap,” Darity wrote, “…policies such as canceling all student debt and providing universal ‘custody bonds’ to the entire population will not be enough. These programs are worth it, and I support them… While these approaches can do a lot of good to help both the poor and the middle class, they will not close the wealth gap between blacks and whites.

Student loan forgiveness will help all borrowers, not just black loan holders. Since it won’t be targeted, it can’t close the wealth gap, some say.

Darity also tweeted, “One of the main problems with the claim that canceling student debt will close the racial wealth gap is the broader implicit assumption that B/W wealth differences are driven by debt. But the average overall white debt is actually higher than the average overall black debt.

He continued that the complex issue of the wealth gap needs to have a more ambitious policy to close it.

“One of the major problems with the claim that canceling student debt will close the racial wealth gap is the broader implicit assumption that B/W wealth differences are driven by debt. But average overall white debt is actually higher than average overall black debt,” he tweeted.

Reparations lawyer Yvette Carnell, co-founder of American Descendants of Slavery (ADOS) stepped in and said reparations was the only way to close the wealth gap.

“Cancellation of student debt stabilizes white America. This does not close the racial wealth (lineage) gap. Only reparations close the racial wealth gap. Stop saying that,” she tweeted at Warren.

Photos: William Darity Jr. (Justin Cook, Minneapolis Fed) / NAACP President Derrick Johnson, Jan. 15, 2022, in Los Angeles (AP Photo/Richard Vogel) / Graduating students, Class of 2016, City College of New York, June 3, 2016. (AP Photo/Bebeto Matthews)



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John A. Bogar