The Black Student Debt Crisis

Student loan debt–now the second largest type of debt after mortgages–exceeds even credit card debt. Currently, about 42 million Americans have student loans, making student debt relief an important issue among voters, especially young adults. For black college students, the weight of student loan debt can hinder their social and economic stability.

Research shows 86.6% black college students take out federal loans to attend four-year colleges compared to just 59% of white students. A black graduate from a four-year college has $7,400 more in student debt. Black students are also more likely to default on their student loans than their white counterparts.

For black students in particular, student loan debt relief would improve their future social and economic status, as well as alleviating the stress that comes with managing massive amounts of debt after graduation.

Although financial literacy on appropriate borrowing amounts can be taught, improving black college students’ awareness of the issue alone will not solve the problem. Increased opportunities for repayment and loan forgiveness plans are necessary.

Financial Hurdles for Black College Students.

-Less Generational Wealth:

For decades, there’s been a gap in net worth between blacks and white households. In 2019, the median white household held $188,200 in wealth, 7.8 times that of the typical black household.

Decades of racist housing policies and labor inequalities obstructed black families from accumulating such wealth as home equity, investments, and savings. Federal housing policies that resulted in segregationist practices that designated black neighborhoods the riskiest–and white communities the safest–for mortgage lending.

Black families were also forced to turn to predatory lenders to finance their homes, which also lead to monumental debt or even foreclosures. These practices created huge economic disparities between black and white families.

-More Likely to be the First in Their Family to Graduate from College

According to the U.S. Department of Education, 1 in 7 black college students is the first in their family to attend college. First-generation students and their families are often unfamiliar with the true costs of college and the details of financial aid.

-They Experience Pay Disadvantages after Graduation

It’s commonly assumed that completing a degree increases your earning potential. But even with the same level of education, black workers are paid less than white workers. They’re also less likely to be promoted which can be attributed to biased and discriminatory practices in the workplace.

Achieving lower earnings after finishing college creates disadvantages for repaying debt, especially for private loans. Black students may also be unaware of income-driven repayment plans for federal loans that can ease the financial burden of heavy student loan debt.

Recently , black students have become more likely to enroll in graduate programs than they were previously, possibly due to the challenges they face with securing high-paying jobs. Although an advanced degree may open the doors to greater job prospects for black students, earning such a degree increases one’s student loan debt since there are no federal grants for graduate level education.

-Student Loan Forgiveness Needed to Build Black Wealth

If student loan debt continues to cripple black students and their families, social and economic inequalities will persist. Student loan debt prevents black students from building wealth and forces them to delay home ownership, retirement savings, and raising a family. When students are saddled with loan debt, they’re unable to contribute to and revitalize the economy.

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