Report: Black Borrowers Struggle With Student Loan Debt More Than Other Racial Groups

By Joelle Fredman, NASFAA Staff Reporter

Black borrowers struggle with student loan debt more than other racial groups due to limited financial resources, poorer academic preparedness, and lower earnings, among other factors, according to a new report from the American Council on Education (ACE). Addressing these issues, according to the report’s authors, “is critical to ensuring access to meaningful educational opportunities for all who can benefit.”

The report found that a larger number of black students received financial aid in 2015-16 (96.1 percent) compared to, for example, white students (86.4 percent) and Asian students (83.7 percent), and were more likely to take out federal loans to finance their higher education. Specifically, while 37.3 percent of students overall took out both subsidized and unsubsidized federal loans in 2015-16, that figure was closer to 50 percent for black students.

Black students also graduated from bachelor’s and associate degree programs in 2016 with higher average debt per borrower—$34,010 and $22,303, respectively—than any other racial group, according to the report. Overall, students of all races graduated from these programs with average debt of $29,669 and $18,501, respectively. The authors warned, however, that these debt levels could be partially be due the fact that 58 percent of black students pursuing bachelor’s degrees in 2015-16 identified as independent, compared to 40.8 percent of Asians students. Black students pursuing associate degrees also identified as independent at higher rates than other races. Additionally, the authors noted, black students were more likely across both credential-types to attend for-profit schools, “where tuition prices and debt levels are much higher.”  

The report noted similar findings for master’s and professional degree students. While 56 percent of all master’s degree students borrowed to fund their advanced education, this figure was 81.3 percent for black graduate students. With regard to professional degree students, 78 percent took out loans, compared to 91.6 percent of black students.

Further, while 29 percent of all bachelor’s degree students in 2015-16 graduated without debt, that figure was only 14 percent for black borrowers. And while 18 percent of students overall accumulated $40,000 in debt or more that year, this was true for close to 33 percent of black students. With regard to graduate school, 43 percent of white borrowers completed without debt, compared to only 19 percent of black students.

“We should be incensed by this... I feel a sense of sorrow for all of us. How bold and innovative are we going to be? Because this is no longer acceptable,” said University of Maryland higher education professor Sharon Fries-Britt at an event promoting the report.

The report’s authors pointed to a few factors—in addition to identifying as independent and attending for-profit institutions—that they found to contribute to black students taking on more debt and struggling to repay it. For example, they wrote that these trends are “at least partially attributable to the low levels of financial and other resources available to them when they enroll in college,” adding that parents of black college-aged students have a median household income equal to 70 percent of the overall household income median.

The authors also wrote that black students often have “relatively low instructional resources and come to college less prepared for its academic demands than others,” which can be attributed to poor school resources and community environments. Due to this, black students must take at least one developmental education course in college at a rate of 47 percent—compared to 39 percent overall—which adds to the cost of college yet does not count toward a degree, the authors wrote.     

The outlook for black students after college in the labor market also sets them up for poorer outcomes, according the report. The authors noted that “given their higher debt levels, African American students would have more difficulty than others repaying their loans even if their post-college earnings were similar. But African American (and Hispanic) adults between the ages of 25 and 34 have lower earnings than white and Asian adults with the same level of educational attainment—further exacerbating an already uphill climb to student loan repayment.”

They found that while median earnings for white students with bachelor's degrees in 2016 was $47,478, that number dropped to $41,529 for black students.The authors also noted that black borrowers were less likely than other racial groups to have help from their parents to repay their loans. In fact, while 20 percent of Asian students who enrolled in 2003-04 reported help from families in repaying their loans, that figure was only 10 percent for black borrowers.

“Student debt is more of a burden for African American students than for others. The financial resources available to them before, during, and after college are very limited,” the authors wrote. “Providing more grant funding, better guidance in choosing postsecondary paths, and stronger supports while students are in college has the potential to mitigate some of the difficulties facing African American students.”


Publication Date: 2/19/2019

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