Quick Note on Student Debt and Black Entrepreneurship
Earlier this week, Kamala Harris unveiled a new student debt forgiveness proposal, which is part of a larger plan aimed at expanding educational and entrepreneurship opportunities for Black Americans. Along with making a variety of investments in Historically Black Colleges and Universities (HBCU), and increasing the proportion of federal contracts awarded to minority-owned businesses, Harris would forgive student debts of up to $20,000 for any Pell Grant recipients who start a business that operates for three years in a disadvantaged community. Participants would be able to “defer all of their student loans, interest-free, during [the three-year period of] business-formation.”
Needless to say, Harris’s student debt forgiveness proposal is far more constrained than the plans forth by both Bernie Sanders and Elizabeth Warren, and reactions to her proposal have generally been pretty skeptical. The response on Twitter was particularly hostile, prompting Harris to repeatedly note that her seemingly meager student debt forgiveness proposal was merely one aspect of her larger plan to reduce the opportunity gap for Black entrepreneurs.
Most of the commentary on social media has honed in on the apparent arbitrariness of Harris’s proposal. Why focus only on Pell Grant recipients? Why does this only apply to entrepreneurs? Why can participants only form businesses in disadvantaged communities?
Limiting her focus to Black entrepreneurs certainly seems like a tactical misstep for Harris, given the broader appeal of things like universal debt forgiveness and free public higher education. But much of the commentary surrounding Harris’s student debt forgiveness proposal seems to be missing the point. Unlike the plans put forward by Warren and Sanders, the goal of Harris’s student debt forgiveness proposal is not broad forgiveness of student debt. Rather, Harris’s entire plan is aimed at incentivizing entrepreneurship among Black Americans, and eliminating barriers — such as access to business loans and startup capital — that often prevent minority-owned businesses from succeeding.
According to the Department of Education, over 70 percent of Black full-time, undergraduate students receive Pell Grants, compared with only 34 percent of White students. So, to the extent that large student loan burdens put Black Americans at a disadvantage when it comes to forming businesses, Harris’s student loan forgiveness proposal seems pretty well-targeted. And Harris has long maintained that increasing opportunities for entrepreneurship is one of several ways to help reduce the persistent wealth gap between White Americans and Black Americans.
It is certainly reasonable to argue that the Democratic presidential candidates should be focusing on more broad-based policies, and that progressives in general need to spend their time crafting policies that address the wealth gap between the very top of the distribution and the rest of America. It is also reasonable to argue that Harris’s plan isn’t very well designed to meet its own purported goals. I generally agree with these sentiment. But if this is how people feel, they should criticize Harris’s policy emphasis and attack her proposals on the merits. What they shouldn’t do is pretend that Harris’s student loan forgiveness proposal has the same objective in mind as the proposals put forward by Warren and Sanders.
