Over the past few decades, the student loan debt crisis has swelled to affect upwards of 45 million Americans, and trailblazing legal research and activism is showing that it does not affect everyone identically. Communities of color, particularly Black and Latinx communities, are experiencing economic distress from student loan debt at higher rates and with more ripple effects than white borrowers.
When Kat Welbeck L’14 transitioned from her previous position at the Consumer Financial Protection Bureau to her new role as Civil Rights Counsel at the Student Borrower Protection Center (SBPC), she was excited to take on this complicated and critical issue.
“Not only is the student debt crisis a crisis that is affecting homeownership, family formation, and entrepreneurship for an entire generation, but there is also a racial equity argument in why we’re looking at debt cancellation,” said Welbeck. “If we’re going to talk about student loan debt, we’re going to have to talk about systemic racism.”
The SBPC is a relatively young non-profit – it started in 2018 – that is dedicated entirely to alleviating student loan debt and the burdens it carries. As Civil Rights Counsel at SBPC, Welbeck focuses on the intersection between student loan debt, race, and class.
Welbeck explained that Black and Latinx communities not only have disproportionate amounts of student loan debt in comparison to white communities, but they are also more likely to face other issues of discrimination such as the wage gap, which makes paying back student loans more difficult.
“None of these things happens in a vacuum. Looking at student loan debt, it looks so niche, but it affects health, housing markets, small business formation, and families,” Welbeck said. “There are just so many places where all of this is overlapping. ”
In her role, Welbeck works with researchers to create reports that help articulate the ways in which racial and economic justice should play into conversations about student loan debt policy. Recently, Welbeck worked with a team of researchers to put together a report on what SBPC has termed “educational redlining,” which is a term that describes the ways in which financial technology (“fintech”) companies have begun to factor student loan debt data – such as whether someone attended an HBCU – to creditworthiness calculations. While fintech’s move might at first glance seem like a positive thing in that it purports to extend credit to a wider breadth of people, SBPC researchers found that the measure actually has several covert detrimental impacts on Black and Latinx borrowers.
“We want to make more inclusive credit markets, but we need to make sure that we’re thinking about the ways that we use certain criteria,” Welbeck explained. “The use of education data may seem like it’s neutral or like it may not have an effect, but it can actually disproportionately affect certain communities.”
Over the summer, the report attracted the attention of five Democratic senators – now Vice President Kamala Harris (formerly D-CA) and Senators Cory Booker (D-NJ), Sherrod Brown (D-OH), Robert Menendez (D-NJ), and Elizabeth Warren (D-MA) – who proceeded to request that the Consumer Financial Protection Bureau take action.
“It was really exciting that we were able to write this report and bring these issues to the table,” Welbeck said. “We need to make sure we’re talking about these things when people are talking about fair lending issues.”
In her role, Welbeck has also worked with cities to conduct studies that help them better understand how people are experiencing student debt locally, sometimes on a neighborhood-by-neighborhood level. The more cities know, the more able they are to leverage resources they already have to assist borrowers. Helping cities see where they might implement creative solutions to help their residents is part of SBPC’s goal.
With the COVID-19 pandemic continuing to place unprecedented burdens on the nation’s economy, the student loan crisis has repeatedly made its way into local and national headlines alike. Interest groups are advocating that President Joe Biden adopt student debt relief or forgiveness policy as part of his pandemic aid plan.
For Welbeck, seeing racial equity take a prominent role in conversations about student debt relief signifies progress.
“It’s this moment where all these things are converged,” Welbeck said. “Not too long ago, debt cancellation wasn’t even a conversation, so it is really exciting to be able to put the pieces together and to tie in an equity argument.”
Welbeck attributed some of the urgency around racial equity in the student loan crisis to the racial justice movements that have been going on across the country since George Floyd’s death in May. Though racial discrimination has always played a role in the student debt crisis, Welbeck reflected that “people’s ears are open” to conversations about racial equity now in a way they may not have been before.
“It took some really unfortunate events this summer, but it’s enabled people to talk about racial equity in this country and what systemic racism really means. We’re having honest conversations about how racism in this country shapes so much,” Welbeck reflected.
Welbeck credited the University of Pennsylvania Carey Law School’s commitment to interdisciplinary learning to her capability in navigating a position that, by its nature, involves intersectional thought and complex problem-solving.
Even after graduation, Welbeck has found a way to keep her links to the Penn community strong.
“I know it’s really weird to do a shout out to my book club, but I think it’s really telling of my Penn experience,” she laughed.
The book club includes several members of the Law School’s Class of 2014, a few of whom work in Civil Rights or related fields. Recently, they even had a (virtual) guest appearance from the Law School’s own George A. Weiss Professor of Law and Sociology and the Raymond Pace and Sadie Tanner Mossell Alexander Professor of Civil Rights Dorothy Roberts, who visited the book club to talk about her book, Fatal Invention: How Science, Politics, and Big Business Re-create Race in the Twenty-First Century.
For Welbeck, the book club represents the Law School’s reputation for genuine collegiality. Particularly during the last few months, wherein amplified conversations about racial justice have been layered on top of isolating social-distance practicing, the book club has provided a source of comfort and support that Welbeck values highly.
“It’s been really fun to be able to have that network tie in, to still be able talk about these same issues with one another, and to have that support network as we transfer to different positions in our careers and move to different places,” Welbeck said.
This feature is part of a series Penn Law Journal has collected about alums who work hard to fight for Civil Rights in our communities. More information about alumni events and programming can be found on the Penn Alumni homepage.