Student loan debt is swelling for graduates across the country.
But according to a new report, the crisis is hitting students of color the hardest – and widening the racial wealth gap in the process.
The National Association for the Advancement of Colored People (NAACP) and the Center for Responsible Lending (CRL) released a report titled “Quicksand: Borrowers Of Color & The Student Debt Crisis” during the NAACP national convention in Detroit this week.
The report is “trying to make the argument that higher education is a public good,” said Julia Barnard, one of the co-authors and a researcher at the Center for Responsible Lending. “College should not be a luxury. Everyone should have a chance to pursue it, and the way it’s going now, not everyone can.”
Other studies have documented the extent to which large proportions of minority students borrow and fall into debt. The NAACP report says that about 85 percent of African-American graduates – and nearly 90 percent of native Hawaiians and Pacific Islanders – had to take out loans to pay for college in 2016. That’s 15 to 20 percent more than White students.
“Those numbers are very high,” Barnard said. “That indicates this crisis is hurting certain populations more than others, and it’s happening to many, many people. The alarm bells are ringing.”
The report abounds with alarm bells.
- In 2009, nearly a third of Latinx borrowers dropped out of college.
- Almost half of African-Americans who took out loans in 2003 and 2004 defaulted by 2016, and up to 70 percent of that group is expected to default five years from now.
- Women graduated with $2,700 more debt than men, putting women of color at a distinct disadvantage.
Authors of the report were careful to put data in the context of students’ lives before and after college. They point out, for example, that the average African-American family has 10 times less wealth than the average White family. This means African-American children on average get less financial support from their parents and have to take out more loans.
After college, Black and Latinx graduates regularly face discrimination in hiring and earn less than White graduates, making it harder to pay back what they owe.
Women similarly make less than their male counterparts after graduation, which keeps them in debt longer. Latinas make 53 cents and Black women make 63 cents to every dollar earned by White men. These women have the highest average student loan debt.
The report also includes historical context behind the numbers. It emphasizes that students haven’t benefited equally from past federal investments in higher learning, like the GI Bill or state funding for public universities that resisted integration. Inequities in student loan debt, it argues, are a part of a wider continuum.
“Structural racism has made it more difficult for African-American students to economically, educationally and otherwise catch up with their White counterparts,” said Hilary O. Shelton, NAACP Washington bureau director and senior vice president for policy and advocacy, describing African-American students making regular payments but still struggling with debt.
“Needless to say, the time to end this situation is long-overdue,” he said.
The report includes an extensive list of policy suggestions, including factoring living costs into college affordability plans and increasing support for HBCUs, minority serving institutions and tribal colleges, among other recommendations.
“The racial wealth gap extends to these institutions and they’re not getting what they need and deserve,” said Barnard.
It also calls for specific reforms such as enrolling all borrowers in affordable, income-driven loan-repayment plans. Once students have made income-based payments for 15 years, it recommends their loans be forgiven. It also suggests expanding Pell grants to incarcerated students and Dreamers, lowering interest rates and requiring borrower protections in contracts with student loan providers.
The report puts a special focus on regulating for-profit colleges that offer students low-quality programs at high prices, especially students of color, veterans and single mothers. Federal data indicate that more students at for-profit colleges need to take out loans, about 83 percent, compared to 66 percent of students at public institutions.
And students of color often see poor returns for their tuition. About 67 percent of Latinx borrowers at four-year for-profit colleges dropped out, for example. The report asks Congress to set standards for for-profit schools and to offer debt relief for students misled by predatory programs.
The picture painted by the report might seem bleak, Barnard said, but researchers don’t want students to feel defeated. The policy recommendations are meant to show that there are concrete steps lawmakers can take to address inequalities in student loan debt – and higher education is worth the work.
“It’s really important to acknowledge that the crisis is a huge burden to many people,” said Barnard. “But we don’t want people to think it’s not worth it. We think there’s hope.”
Sara Weissman can be reached at firstname.lastname@example.org.