Closing the Racial Wealth Gap for Black Women

Millions of people across the country have anxiously begun repayment of student loans, even as historic inflation continues to stretch families’ budgets across the country. Black women shoulder a disproportionate amount of the $1.6 trillion in federal student loan debt, and as such are disproportionately impacted. To be clear, Black women hold 43 percent more undergraduate debt—and nearly 99 percent more graduate school debt—than our white counterparts a year after graduation.

As a result, pursuing higher education, which has traditionally been as a path of entering the workforce and attaining higher wages, is yet another barrier Black families must face trying to build wealth.

According to The Urban Institute, Black women face a 90 percent wealth gap, with the wage gap driving two-thirds of this divide. We lose out on nearly $1 million—$907,680 to be more precise—over a 40 career because of that gap.

For generations, systemic barriers have prevented our families and communities from building wealth and accumulating assets. Thankfully, there are programs available that can help Black women like me get ahead.

Unfortunately, not enough of us know they exist.

After graduating high school and having my first child, I participated in a pilot program designed for teen parents to access the resources needed to become financially stable and independent. That training helped me first obtain a certificate in child care, and then earn my bachelor’s degree.

Even after obtaining my degree, I continued to struggle financially, particularly because of Boston’s high cost of living. As a result, I stayed in Section 8 housing as I began my professional career.

As my family grew, I found myself having to re-evaluate my financial situation once again. My sister told me about Compass Working Capital, a national nonprofit headquartered in Boston that administers the Department of Housing and Urban Development’s (HUD) Family Self-Sufficiency (FSS) program, America’s largest asset-building program for families with low incomes. Compass runs the FSS program in partnership with my housing provider, Boston Housing Authority.

Because I live in HUD-assisted housing, as I begin to earn more money, the amount I owe for rent automatically increases. But in FSS, that increase is put into a savings account by my housing provider. Compass partners with families like mine, providing direct financial services and guidance on how we can build and leverage these savings to attain assets.

Savings from FSS can be used for anything—most participants use it for things like education, homeownership, a car, or even to start a small business. For me, the savings have been a game changer, providing me peace of mind in the knowledge that I can secure my family’s future as our finances change over time.

My original goal when I joined the FSS program was to purchase a home, but due to the U.S. Supreme Court overturning the Biden administration’s student loan forgiveness plan, I have been forced to reassess my timeline. I took out $12,000 in loans to help pay for my degree. But with interest rates so high, it’s hard to make a dent in them, even though I’ve never missed a payment. The worst part is, I’ve already paid off my original loan amount, and then some, but I now owe more than $35,000 because of the interest.

Had my loans been forgiven, I would have been able to move quicker on my long-term goal of buying a house. But the resumption of payments has a huge impact on my budget. I have restarted paying my current loan, as well as my daughter’s Parent PLUS loans.

And to add insult to injury, the interest rates on both loans have compounded.

As a mom, it’s part of my job description to worry about the future. But it shouldn’t be so hard for families like mine to get ahead, especially when we’re doing what we’ve been told to do—like investing in higher education and pursuing careers—to achieve financial stability.

The U.S. Supreme Court does not have to be the final word on student debt cancellation. Congress and President Joe Biden can help millions of Americans continue to dream and achieve those dreams, by passing student debt cancellation through a variety of legislative and executive means respectively.

Congress needs to stop using us as pawns in their political games. Rather than ripping the rug out from families working hard every day just to get by, Congress should make sustainable investments in social safety net programs such as FSS. This will bring us closer to ending the racial wealth gap.

In the richest country in the world, there is so much that can be done to ensure families of color can overcome the wealth gap. Let’s get to work.

Damali Omolade is a Boston-area resident and client in the FSS program run by Boston Housing Authority and Compass Working Capital.

The views expressed in this article are the writer’s own.