A College Board study released today has found that undergraduate student debt is heavier among African-American bachelor’s degree recipients than among graduates from other racial and ethnic groups. Twenty-seven percent of 2007-08 Black bachelor’s degree recipients borrowed $30,500 or more, compared to 16 percent of Whites, 14 percent of Hispanics/Latinos, and 9 percent of Asians. Along with the finding, reported in Who Borrows Most? Bachelor’s Degree Recipients with High Levels of Student Debt, researchers also found that a growing number of students are borrowing at high levels and taking out loans that are likely to cause substantial payment difficulties.
“The analyses in Who Borrows Most? emphasize the urgent need not only to strengthen postsecondary financing policies but to provide better guidance and improved financial literacy for students before they take out loans that will get them into trouble down the road,” said College Board president Gaston Caperton in a statement. “The College Board remains committed to working with our member schools and colleges, policymakers and families to help students understand their options and make levelheaded decisions.”
Known to the public for administering the SAT and the Advanced Placement program, the College Board is a not-for-profit membership organization comprising more than 5,700 schools and colleges
The Who Borrows Most? study found that among the 66 percent of bachelor’s degree recipients who graduated with debt, 25 percent borrowed $35,500 or more. The College Board has emphasized that high debt does not necessarily mean that a student would have trouble repaying their college debt. Many students with relatively low debt are as likely to struggle because of low earnings or failing to complete a certificate or degree program, according to the study.
The study found that high debt is most prevalent among students who graduated from for-profit institutions, where more than 50 percent of 2007-08 bachelor’s degree recipients graduated with $30,500 or more in debt. Nonfederal borrowing is also most widespread in this undergraduate segment. Among for-profit bachelor’s degree recipients, 65 percent of borrowers had an average of $11,300 in nonfederal debt — in addition to their federal student loans.
Dr. Sandy Baum, professor emerita of economics at Skidmore College and one of the study’s authors, said in a statement, “Students using nonfederal loans to pay for college are of particular concern because private student loans generally have higher interest rates and do not come with the same repayment protection as federal student loans. These are the students who are more likely to face repayment difficulties.”
The overwhelming majority of high-debt graduates have federal loans. But there are student segments with high debt who have relatively low federal loan obligations. Among high-debt graduates, the highest incidence of this pattern is among affluent Asian students. The report also found that dependent White and Asian bachelor’s degree recipients have higher average nonfederal debt than do Blacks and Hispanics/Latinos.
The highest concentration of nonfederal debt is among dependent students from families with incomes of $100,000 or higher, for whom 70 percent of the debt is nonfederal. It is quite likely that many of these families never apply for federal financial aid so are not offered federal student loans, according to the College Board.