Its not an even space. Look closer. The fender is aftermarket, and may never fit right. I would guess the braces are supposed to go around the axle, as with most aftermarket stuff. It looks like maybe they put the rear one around the axle, and the top one on Schwinn's mounting point on the dropout. Maybe it didn't clear the rack. If it clears the rack, it should be put around the axle. If not, then real Schwinn fender braces are needed, and need to be attached to Schwinn's mounting point. Also the chain should be replaced if worn out or shortened if not worn out, such that the axle lands way up in the front of the dropout where Schwinn put it. That would make it look a lot better.
There's something wrong with the front fender too, but I can't quite tell what.