Findings from a report presented at a conference hosted by the UCLA Civil Rights Project suggest that student debt has a color. Although the majority of borrowers are white, a larger share of black students are in debt than any other group.
Total student loan debt has reached over $1.11 trillion and students are twice as likely to be delinquent on their payments than in the previous decade. No group has been immune to borrowing to pay for their college education, but a recent study by the Wisconsin HOPE Lab suggests that Black students and historically black colleges and universities (HBCUs) are disproportionately impacted by the borrowing crisis.
The authors of the report claim that some of the following factors are contributing to the disparities in borrowing for black students:
· black adults are about twice as likely to have student debt as white adults (34 vs. 16%);
· while the average size of the loan taken by black and white students is nearly the same (~$8,000), that amount represents a much larger fraction of black students’ current family income and their future earnings;
· the median wealth of white families is $124,000 compared to $16,000 for black families;
· during The Great Recession, the wealth of white families declined by 11%, while the wealth of black families declined by 31%.; and
· 13.2% of black students borrowed a federal loan, did not complete a bachelor’s degree, and defaulted on that loan by 2001, compared to just 2.4% of white students.
Together with the increasing cost of a college degree, these factors (and others) “greatly reduce the potential benefits of borrowing” for black students. Ultimately, the authors report the following findings from their analysis:
1. Young adults who attend for-profit colleges and universities enter adulthood with far more debt compared those who attended non-profit institutions, adjusted for confounders.
2. However, attending an HBCU does not appear to increase debt among young adults.
3. The disproportionate enrollment of black students in for-profit colleges and universities contributes to the racial debt gap, but the disproportionate enrollment of black students in HBCUs does not.
4. The disproportionate enrollment of black students in colleges and universities with less generous financial support (as proxied by the proportion of the total cost that is covered by state, federal, and institutional aid), also contributes to the racial debt gap.
5. The racial debt gap exists within schools, as well as between schools, and is largest at colleges and universities with less financial support.