Study Finds Black Borrowers More Likely to Never Be Able to Pay Off Student Debt, Less Likely to Receive Outside Help

By Owen Daugherty, NASFAA Staff Reporter

Black student loan borrowers are nearly twice as likely to never be able to pay off their debt because they are not keeping up with their payments and their balances are increasing, according to projections in a new study.

By comparison, about 7% of white borrowers and approximately 8% of Hispanic borrowers were projected to never be able to repay their loans. The study by the JPMorgan Chase Institute used non-identified data from 301,583 borrowers with a Chase checking account, as well as data from the Experian credit agency, finding 13% of Black borrowers will likely never repay their student loan debt.

“Put simply, our findings suggest that systemic conditions make it such that the Black community experiences less help with student loan repayment despite facing comparatively more strain from student loan repayment,” the study found. “This issue is likely a major contributor to the different rates in loan repayment progress across race groups.”

The median annual amount paid by Black borrowers was $212 less than the $1,850 they were scheduled to pay, the study found, while white borrowers generally paid more than they were required to.

This is likely due to the finding that the median income of Black student loan borrowers is about $12,500 lower than the income of white student loan borrowers, according to the study. 

Contributing to these disparities in borrowers’ ability to pay back their student loans is the racial gaps that exist when it comes in income and wealth, the study said, and reducing those gaps would “boost families’ ability to pay for tuition and repay student loan debt among segments of the population most burdened by student loan debt.”

Furthermore, Black and low-income borrowers are more likely to fall into a “debt trap,” which happens when student loan balances increase rather than decrease over time, even as borrowers make payments.

That finding takes on added importance as millions of borrowers aren’t currently making any payments on their student loans while they take advantage of the administrative forbearance period that suspended interest and payments on federal student loans due to the COVID-19 pandemic. 

As the study noted, the relief from the Coronavirus Aid, Relief, and Economic Security (CARES) Act “will be important to help people smooth consumption but will likely result in families shouldering the debt burden for a longer period.”

The study also analyzed who was paying down someone’s student loan debt, finding that nearly 40% of individuals involved in student loan repayment are helping someone else pay off their student loan debt, with 27% holding no student loan debt themselves.

“Understanding how families share the burden of student debt is important for the design of both loan origination and repayment programs insofar as policies to ameliorate student debt burden ought to consider not only the borrower but also the network of people the borrower relies upon,” according to the study.

Along those same lines, the study found Black borrowers are less likely to be making progress on their loans and are much less likely to be getting help in paying their loans than their Hispanic or white counterparts.

“Although similar portions of all three racial groups receive help, regardless of whether they are making payments or not, a much larger portion of Black borrowers are making no payments and receiving no payment help,” the study stated.

The findings shed further light on the different obstacles various borrowers face, noting that trends for one group may not bear out with another and that “certain segments of the student loan population are significantly burdened by their debt, especially low-income borrowers, the elderly, and Black borrowers.”


Publication Date: 10/14/2020

Susan A | 10/16/2020 9:23:30 AM

I think the systemic conditions are likely addressed, in part, by this: "This is likely due to the finding that the median income of Black student loan borrowers is about $12,500 lower than the income of white student loan borrowers, according to the study."

Allie B | 10/15/2020 12:54:22 PM

Hi Jean,

We understand that reporting on issues related to race requires precise and thoughtful language. Thank you for voicing your concerns. In answer to your question about capitalization, we follow the Associated Press's guideline which stipulates that "Black" should be capitalized "in a racial, ethnic or cultural sense, conveying an essential and shared sense of history, identity and community among people who identify as Black." This aligns with the Associated Press's long-standing guidance on capitalization of other racial and ethnic identifiers such as Latino, Asian American and Native American. We do always attempt to be very intentional with the language we use, but we know there is always room for growth and improvement. If you'd like to have a dialogue with us about this, we'd welcome your thoughts. You can reach us directly at [email protected].

– Allie Arcese, Managing Editor

Joel T | 10/14/2020 1:25:33 PM

I would have to agree with the previous comment of "I would like to see more thought given to how ideas are expressed so as to simply report facts rather than use an article to push a thinly veiled 'social justice' issue."

Jean M | 10/14/2020 1:9:28 PM

Just a few observations:
Why is "black" capitalized in the article and not "white" when referring to people who "appear" to have that color of skin.
Why is there a distinction made between "black borrowers" and "low income borrowers" as though they are mutually exclusive categories? This implies that "black borrowers" are not repaying their loans simply because of the color of their skin, regardless of their financial ability to repay.
The use of the phrase "systemic conditions" as being what leads to less help with student loan repayment in the black community is vague, arbitrary and could imply any number of "conditions". Sounds like the phrase is simply being used because it is trendy.
The article stated that black borrowers repaid LESS than what they owed, but white borrowers paid MORE than they were required to repay. What?!!! Why would ANYONE pay back more than is owed? Do white borrowers just have so much excess money they just throw it at their loan servicer?
I would like to see more thought given to how ideas are expressed so as to simply report facts rather than use an article to push a thinly veiled "social justice" issue.

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