Race, Racism, and Student Loans
Many students and families rely on borrowing to pay for college, though reliance on student loans is far from equally distributed among students and families. Overall, 55 percent of student borrowers hold less than $20,000 in student loan debt and it is rare for students to have six-figure loan balances. However, there are significant differences in who borrows based on the effects of structural racism, such as denial of wealth accrual and inadequate educational resources.
In fact, when we look at students who earned a bachelor’s degree in 2015–2016 (the most recent data available), we find that 64 percent of Black students held at least $20,000 in student debt. Researchers and policy actors frequently view student loans as being irrelevant to Latino students since they borrow smaller cumulative amounts and have been described as “debt averse.” However, recent research and policy reports have shed light on the ways that Latino students are directly hindered by student loan burdens and are indirectly encouraged to enroll in community colleges even if a four-year institution might have been the better fit (in order to avoid accumulating student loans). While often overlooked due to smaller population shares, American Indian, Alaska Native, Native Hawaiian, and other Pacific Islander students also borrow at above-average rates (76 and 90 percent for bachelor’s degree earners, respectively, compared to an overall average of 69 percent). Further, while women are more likely to borrow more than men, one study I conducted at the state level found that women of color—and Black women in particular—drive these findings.
Compounding the inequities in students’ and families’ ability to afford college, are structural and systemic barriers related to student loan repayment. When it comes to paying down student loans, there is evidence at both the federal and state levels that specific subgroups of students are more likely to struggle: students who do not complete their degree, students who attend for-profit institutions, and students who are Black.
As a result, these students face a greater risk of defaulting on their student loans, having their credit adversely affected, having their wages garnished, and even losing Social Security benefits. According to a nationally representative sample of first-time enrolled college students, the data tell us that, on average, Black bachelor’s degree recipients are more likely to default on their student loans compared to White students who earn a bachelor’s degree (21 versus 4 percent, respectively). Even more startling, Black bachelor’s degree recipients default at a higher rate (21 percent) than White students who drop out of college (18 percent). A recent report from the Center for American Progress shows that even with ready access to income-driven repayment plans, which close to one-third of Black bachelor’s degree earners use, Black individuals still default on their student loans at exceedingly high rates.
