Secretary of the Department of Housing and Urban Development (HUD) Marcia Fudge said student debt is a key reason for the disproportionately low homeownership rate among black Americans.
“Who has student debt? Poor people, black people, brown people. We are the people with the most debt, ”Fudge said. Axios in an interview that aired on Saturday. “The system is already leaning towards the idea that we are not creditworthy.”
Recent report from EducationData.org found that black college graduates owed more debt than white college graduates and were more likely to face financial difficulties as a result.
According to the report, “Black and African American college graduates owe an average of $ 25,000 more on student loan than white college graduates,” and “48% of black students owe an average of 12.5% more than they borrowed” after four years after graduation. …
And June 2020 study from Redfinthe real estate brokerage reported that only “44% of black families own the home they live in as of the first quarter of 2020.” For white families, this is 73.7%.
Federal Housing Administration (FHA) in Press release announced on Friday that it would change the calculation of monthly student loan payments to “remove obstacles and provide more access to affordable FHA-insured single-family mortgage financing for creditworthy students with student loan debt, which has a disproportionate impact on people of color “.
Fudge said the changes will allow people to become qualified home buyers, even if they have student debt that would otherwise be a hindrance. “A person who, let’s say, makes about $ 50,000 a year. If they want to buy a house, maybe $ 200,000 or something like that, they have $ 75,000 in student debt, they are not eligible, ”Fudge said. “We’re going to make the same person fit.”
She added that after the adjustments are made, this person will be eligible “at a rate that allows him to enter the house with some share of the capital, but at the same time he will be so attached to this house that he can afford to stay in this house.”
Fudge also said the Fair Housing Act of 1968 is not being properly enforced, contributing to a disproportionately low rate of home ownership among black Americans. The law prohibits housing discrimination on the basis of “race, color, national origin, religion, sex, marital status and disability.”
Despite the law, black Americans still face a number of difficulties in the home acquisition process. For example, Indianapolis Star reported in May, a black woman’s home rose $ 149,000 when a white friend introduced her during an appraisal. In 2020 Business Insider reported that black families pay, on average, about $ 60,000 more than white families in homeownership costs.
Insider Ayelet Sheffi reported that the National Association for the Advancement of People of Colored People (NAACP) and at least 36 different civil society organizations are calling on the Biden-Harris administration to liquidate $ 50,000 in outstanding student loans for each borrower.
“Eliminating student debt will help black and brown borrowers create wealth and enable our economy to move forward as millions of Americans can start families, buy homes and start small businesses,” it said. Press release from the Leaders’ Conference on Civil and Human Rights.
Fudge echoed these sentiments by saying Axios: “For people of color, especially blacks, home ownership is wealth. For us, this is not only wealth, but also the wealth of generations. “
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