The pause on student loan payments is scheduled to end Aug. 31, and millions of Americans are contending with the prospect of another burdensome monthly expense. Dozens of Democratic lawmakers have publicly called for a seventh extension on the payment freeze, and many experts believe that the Biden administration will oblige.

But for Black Americans, who owe a disproportionate amount of the $1.7 trillion in national student loan debt, the student debt crisis is more complex. It is compounded by a history of oppressive economic policies — from sharecropping to subprime mortgages to predatory for-profit colleges — that created a financial weight on Black Americans well before the pandemic era.

That’s one reason why conversations about the loan crisis have moved beyond the freeze to more sweeping policies that cancel debts. The NAACP, along with some Democratic leaders, support canceling as much as $50,000 in loans per borrower, a level that the civil rights organization says would “fuel upward mobility in the Black community and equitable efforts to close the racial wealth gap.” 

“We have to do something about the student loan debt,” said Nicole Smith, a research professor and chief economist at Georgetown University. “It’s unacceptable. It’s untenable. And it’s really too burdensome on American adults.” 

Here’s what you need to know about the student loan debt crisis. 

Is there a significant difference in how many student loans Black and white borrowers take out? Why? 

On average, yes. 

One analysis of federal data found that nearly 87% of Black college students borrowed federal loans to attend a four-year college, compared to less than 60% of white students. Just one year after graduation, Black borrowers owed an estimated $39,043 one year after graduation – compared to just $28,661 borrowed by white students, according to a recent study from the Education Trust. 

By the 12-year mark, the average white borrower has successfully paid off 35% of their debt, while the Black borrower isn’t even close: They typically end up owing 13% more than what they originally borrowed. 

Most experts point to one major issue behind this disparity: the racial wealth gap. Black students often turn to student loans because their parents can’t foot the bill for their higher education.

“Parental wealth was a primary explanatory variable for differences in debt accumulation between white and Black borrowers,” explains Fenaba R. Addo, an associate professor of public policy at the University of North Carolina at Chapel Hill. They “have to turn to credit markets, financial aid, or loan-based financial aid to make up the difference.”

Why were student loan payments paused? Will people have to start paying again next month? 

After the emergence of the coronavirus hit the economy and caused many Americans to lose or leave their jobs, the Trump administration started a loan forbearance program that let Americans avoid paying off student loans without accruing interest. The Biden administration has extended the payment freeze four times, with the latest extension set to end Aug. 31. 

No one is entirely sure whether the administration will extend it again. But many are hopeful. The Wall Street Journal reported that the Department of Education told student loan servicers to hold off on sending upcoming statements to borrowers. 

“We need to think about the context in which the payment freeze came, because of the COVID pandemic, and I think we’ve kept postponing it because of the surges and new variants,” Addo said. “There’s a lot of talk now about a recession — so it may get postponed, again, due to factors that are creating uncertainty in the labor market and the economy.” 

How would the end of the payment freeze impact Black Americans?

It depends on whether you can pay your loans back. But with concerns about a possible recession, it could create significant financial hardships for many.

“I think we’re gonna see a lot of people not paying their loans because of their own financial hardships and ability to do so,” Addo said. This loan delinquency, according to Addo, will “disproportionately fall along racial lines.” 

Many Americans have recovered from the economic calamity that came with the pandemic, when unemployment and poverty rates jumped. But it left some in worse financial situations than before. 

“To just flip a switch and say, ‘OK, now we’re over. We have to get back to normal’ — but it is not normal now,” Addo said. “I think it’s going to be hard for a lot of people.” 

Smith added that even if a borrower is able to make their monthly payments, it could still wreak havoc on their lives — and the broader economy.

“This is something that cuts into your disposable income,” she said. “So, on a macro level, it really reduces the extent of [gross domestic product] creation, GDP formation, consumption spending — all of that is on the decline if you don’t have that much money to buy cars, or homes, or engage in that aspect of the economy.” 

Besides extending the payment freeze, what else can be done to relieve the weight of the student debt crisis? 

The Biden administration has been considering other policies to address the debt crisis, including cancellation of some portion of the loans that borrowers took out. 

Education Department officials are reportedly developing plans to cancel $10,000 of student loan debt for millions of Americans, according to recent reporting from Politico. The process would involve an online application for eligible borrowers. 

That amount falls far short of the $50,000 that advocates and civil rights groups, like the NAACP, have called for. But policy experts have said that forgiving large amounts of debt could come with economic consequences such as inflation — which already is burdening many Americans.

At an Aug. 9 press briefing, White House press secretary Karine Jean-Pierre said that Biden and his administration “haven’t made a decision yet” on student loan cancellation, but plan to do so within the next couple of weeks. 

Smith also refers to the gainful employment initiative started by the Obama administration and later repealed during President Donald Trump’s term. The program incentivized for-profit colleges to ensure its students were educated for employment afterward, according to the National Association of Independent Colleges and Universities. 

“Am I gainfully employed?” Smith said. “When I take the student loan out, can I get a job that pays off the student loan? So it’s good debt if you follow a good degree, get a good occupation.” 

For Addo, the best solution is a policy change that will get rid of loans altogether. “I think what the last few years have done is increased that glimmer of hope that something can be done about it,” she said. 

Do experts think Black Americans should avoid loans altogether? What are other options? 

Despite the $1.7 trillion student loan debt, and the particular way it affects most Black Americans, experts still think taking out loans for school is worthwhile.

“It’s still the only way for you to pay for college,” Smith said. “The question for me remains: Now you have to ask yourself real questions about making sure that once you enter, you exit. You can’t not graduate. You have to get into school. You have to graduate from school. And you have to make sure that you take a degree of value, so you get a good job.”