The burden of student loan debt limits future finances of graduates of historically Black colleges and universities (HBCUs). As such, college education is not fulfilling the promise of being a great equalizer and closing wealth gaps, according to a recent report.
Christelle Bamona
HBCU graduates have an average debt of $32,373 after graduation, which is 19% higher than those at non-HBCUs.
“Paying from the Grave” – by the Center for Responsible Lending (CRL) – highlights the effects of systemic racism on wealth accumulation. CRL found that student debt prevented many HBCU graduates from building wealth through means such as buying a home or investing in retirement. The report found that student debt also limited career choice.
“HBCU students receive less institutional aid and are more likely to take out loans than their peers at non-HBCU institutions,” said Christelle Bamona, CRL researcher and report co-author. “While President Biden’s recent historic student loan relief plan will benefit millions of federal student loan borrowers, including HBCU borrowers, policymakers must now work to reverse the systemic underfunding of HBCUs and increase the purchasing power of the Pell Grant, among other reformative measures.”
Other findings included that student loan repayment program rules can be confusing and difficult to navigate and that rising college costs and underfunding force a disproportionate number of low-income and first-generation students to take on significant student debt.
The federal student loan payment pause was great relief for HBCU alumni finances, according to the report.
“Our research also showed that the payment pause played an important role in borrowers’ finances and mental health,” said Lucia Constantine, CRL researcher and report co-author. “The payment pause enabled 85% of HBCU students to make at least one positive, wealth-promoting financial choice, such as starting or building emergency savings and paying other debts. Borrowers also reported being better positioned to achieve long-term goals like homeownership, pursuing further education or starting a business.”
The report also had policy recommendations to help alleviate the issues, such as state tax waivers on student loan cancellation; accountability for predatory student loan servicers; doubling the Pell Grant; and investments in HBCUs to bolster grants and scholarships.
