New Series Examines Student Loan Debt Disparities in the South

By Maria Carrasco, NASFAA Staff Reporter

A new research series from the Student Borrower Protection Center (SBPC) explores student loan disparities in Southern cities across the country, and found that majority-Black neighborhoods in Atlanta have seen disproportionate growth in student debt burdens.

The series, named Student Debt in the South, begins in Atlanta. Researchers found that between 2010 and the student loan payment pause in 2020, majority-Black neighborhoods in Atlanta had higher average student loan balances than predominantly white areas. The report noted that researchers analyzed proprietary data from the University of California Consumer Credit Panel data from 2010-20. 

Specifically, in 2010, borrowers in majority-Black zip codes in Atlanta had an average student loan balance of over $10,000. That’s compared to borrowers in majority-white zip codes in Atlanta who had an average student loan balance of just over $8,000.

And that balance grew within those 10 years. In 2020, borrowers in majority-Black zip codes in Atlanta had an average student loan balance just over $14,000. Borrowers from majority-white zip codes had an average balance of just over $12,000. The report noted the disparities were most egregious in 2018, where the average student debt in majority-Black zip codes was nearly $7,000 more than majority-white zip codes.

In the report, SBPC argues that the “student debt crisis is, at its core, a civil rights crisis.” And as a result, Black borrowers, especially Black women, face many of the heaviest burdens because of the student loan debt they take on. 

“Our nation’s shameful and persistent racial wealth gap means that students of color, particularly Black borrowers, are more likely to have student debt, borrow in higher quantities, and face more struggles in repayment, as evidenced across metropolitan Atlanta,” said Kat Welbeck, advocacy director and civil rights counsel at SBPC, in a statement. “Politically-motivated efforts to block President Biden’s debt relief plan, including through the Congressional Review Act, would further entrench the racial wealth gap, denying thousands of Atlantans, and millions more Americans, life-changing relief.”

The report also found that Atlanta’s majority-Black zip codes have larger rates of delinquent borrowers. In 2010, majority-Black zip codes had a delinquency rate of 11%, compared to 5% in majority-white neighborhoods. That number peaked in 2015, when Black-majority zip codes had 19% of borrowers delinquent on their loans, compared to 8% in white-majority zip codes.

The report also examined the effect of President Joe Biden’s student loan cancellation plan, which would cancel up to $20,000 in student loan debt for eligible borrowers. Looking at the distribution of student loans over time, in 2010, more than half of Atlanta borrowers owed less than $20,000. However, in 2020, over half of Atlanta borrowers owed more than $50,000 in student loans, the report found. 

And borrowers in Atlanta’s majority-Black zip codes have student loan balances that are higher. In 2020, 61% of borrowers in Atlanta’s majority-Black zip codes owed more than $20,000. In white-majority zip codes, 55% of borrowers owed more than $20,000.

In the report’s conclusion, SBPC calls for the Biden administration to ensure a “swift and efficient implementation of debt cancellation” while also working to fix existing programs that give borrowers debt relief.

“Education is supposed to be a tool for social mobility, and student loans were marketed as a way for Americans to invest in themselves and their families in order to achieve their dreams,” the report states. “But research among borrowers in communities across America has overwhelmingly established that the student debt crisis is hampering economic opportunity for millions, especially borrowers of color. Atlanta is a city that tells us so much about what it means, and what is needed, to build a vibrant multiracial middle class, and unfortunately as we see across the country, student debt continues to get in the way of that goal.”


Publication Date: 4/27/2023

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