In 2018, Aaricka Washington took out $100,000 in student loans.
The money covered a master's degree and living expenses for 10-month journalism program at Columbia University. It was Washington's first experience with student loans: She'd received an income-based scholarship to attend Indiana University for free as an undergraduate student. But after graduating, she felt pressured to get a master's degree from a prestigious school to land a higher-paying job.
The result was a mountain of debt that heavily eclipses the $10,000 she'll gain in forgiveness from President Joe Biden's new student loan plan. Like many other Black borrowers, Washington says she feels left behind.
"This is just a drop in the bucket for me," Washington, a 30-year-old associate editor at nonprofit media outlet LAist, tells CNBC Make It. "There's nobody in my family that gave me thousands of dollars for me to go to school. I had to do that on my own."
Black students and graduates take out more student loans than the average white borrower, and it's harder for them to pay their loans back. Four years after graduation, the average Black borrower owes $53,000, while the average white borrower owes $28,000, according to the Brookings Institute.
After that same four-year span, 48% of Black students owe an average of 12.5% more than they initially borrowed, while 83% of white students owe 12% less, according to the Education Data Initiative.
Statistics like that lead some experts to say that Black borrowers specifically need more than $10,000 in loan forgiveness. Andre Perry, a scholar-in-residence at American University who specializes in race, structural inequality, and education, says Biden's announcement is a promising start to fixing the student loan debt crisis.
But, he says, it overlooks borrowers whose ability to buy a home or start a family are held back by student loans — even if they earn relatively large paychecks.
"It misses the low-wealth individuals who are now high income," Perry says. "There are lots of people who started off poor and now they're middle class. But they are still saddled with debt."
Perry says annual salary is a misleading way to gauge how easily someone can pay back a student loan. Instead, he focuses on overall wealth.
That's largely because family money can often make the difference between choosing a fixed-rate loan repayment plan and a graduated repayment plan when you're fresh out of college.
Take income-based plans, for example. The lower monthly payments are easier to afford on entry-level salaries, but they ultimately result in much higher total costs because of the steep interest borrowers accrue in those early years. People on income-based plans can spend years accruing interest faster than they can pay it off, even if they're making their minimum payments each month.
In a fixed-rate plan, you pay the same monthly minimum over the course of your repayment. You'll pay a lower total amount, but it's harder to afford those monthly payments on an entry-level salary — unless you have some amount of generational wealth at your disposal.
The Federal Reserve Board's 2019 Survey of Consumer Finances found that the country's median white household wealth was $188,200, nearly eight times higher in than Black households. A Brookings Institution analysis of that survey's data found that 30% of white households could give their children a $195,000 inheritance, while only 10% of Black households could afford $100,000 — a much smaller figure.
"People from low-income households are told going to college is the primary route for getting a piece of the American Dream," Perry says. "White people categorically ... have more wealth. They have their own higher-ed plans to make college more affordable."
Georgetown University graduate student Bre Jefferson says she holds $47,000 in debt with interest from attending Western Washington University to earn her bachelor's degree. Her master's in public policy is covered by a merit-based scholarship, but Jefferson says carrying debt — even after $10,000 in forgiveness — affects how she's charting out her future.
"I used to work in jobs where I did not make six figures, but they were jobs that fed who I am as a person and how I want to contribute to society," Jefferson, 31, says. "I have to decide if I want to go after financial success or work in a job that aligns with my intrinsic values."
Both Jefferson and Washington say they're concerned about their ability to buy houses, start families and invest long-term. And because their loan payments have been deferred since 2020, they don't exactly know what they'll do when payments resume on January 1, 2023.
For now, Washington says her savings are going toward furnishing her apartment and a family trip in December. Jefferson says she's trying to decide between paying off her loans as quickly as possible or making only her minimum monthly payments so she can put more money toward retirement.
The concerns of both women show exactly why high debt can have overarching economic consequences, Perry says: "When you have more debt, you have less discretionary money to put towards essentials, like housing and energy. You also can't invest as much, so you see lower home ownership and lower business ownership."
The student loan debt that Black borrowers are racking up could even be shrinking — or eliminating — the Black middle class, by perpetuating a cycle of stagnating or depleting wealth and leaving people with less ability to fund their children's higher educations.
Researchers define the American middle class by wealth and education level, but highly educated Black households typically hold significantly less wealth than their white counterparts, says Fenaba R. Addo, co-author of the upcoming book "A Dream Defaulted: The Student Loan Crisis Among Black Borrowers."
"We started off by leaning on literature that says Black people with some form of higher education constitutes the middle class," Addo, an associate professor of public policy at University of North Carolina at Chapel Hill, says. "But looking at their wealth portfolios, that wasn't reflective of the American middle class as a whole."
The Biden administration's announcement is a great first step, Perry says: Lowering monthly payment caps from 10% of a borrower's income to 5% could make a significant difference.
So could the plan's extra $10,000 in student loan debt forgiveness for Pell Grant recipients. In the 2015-2016 school year, 72% of Black students received Pell Grants in comparison to 34% of white students, according to National Center for Education Statistics.
Still, the total amount of forgiveness isn't enough specifically for Black borrowers, says Perry. In his ideal world, he adds, the U.S. would find a way to offer free college — much like the country's K-12 public school system.
"If we're committed to the American dream, we should have a public option for people to attend college that's similar to the public option we have for K-12 schools," he says. "Retroactively, we should forgive more amounts of student debt. And ideally, that forgiveness model would be based more off of wealth, and not just income."
Other experts warn against adding onto the current amount of forgiveness, which is already projected to cost the federal government $329.1 billion over 10 years, according to a budget model from The Wharton School of the University of Pennsylvania.
From that data, Andrew Lautz, a director of federal policy at the National Taxpayers Union, estimated it would cost the average taxpayer more than $2,000. "That has consequences for consumers," Lautz told CNBC last week. "It has consequences for taxpayers."
But putting funds back into Black borrowers' bank accounts will allow them to reinvest back into the economy more fully, Perry says.
"People believe that education predicts for wealth, when it's actually wealth that predicts for education," he says. "We're still dealing with the symptoms of discrimination instead of the root causes, and at some point, we will have to eliminate it at a structural level for Black borrowers to even start building wealth."