United States: Disparity in college student loan debt more than triples after graduation
The moment they earn their bachelor’s degrees, black college graduates owe $7,400 more on average than their white peers ($23,400 versus $16,000, including non-borrowers in the averages). But over the next few years, the black-white debt gap more than triples to a whopping $25,000. Differences in interest accrual and graduate school borrowing lead to black graduates holding nearly $53,000 in student loan debt four years after graduation—almost twice as much as their white counterparts.
While previous work has documented racial disparities in student borrowing, delinquencies, and defaults, in this report we provide new evidence that racial gaps in total debt are far larger than even recent reports have recognized, far larger now than in the past, and correlated with troubling trends in the economy and in the for-profit sector. We conclude with a discussion of policy implications.
Unfortunately, because the U.S. Department of Education does not regularly track borrowers by race, data limitations have hampered efforts to connect research on racial gaps with detailed new studies of debt and default patterns.
In August 2016, the National Consumer Law Center (NCLC)—supported by nearly 40 other public interest groups, including the American Civil Liberties Union (ACLU)—sent a letter to Education Secretary John King demanding the department track and remedy the disproportionate consequences of student loan debt for borrowers of color. “For nearly a decade,” the letter states, “the Department of Education has known that student debt impacts borrowers of color differently from white borrowers. Yet in that decade, the Department has failed to take sufficient steps to ameliorate the disproportionately negative impact on borrowers of color, or even to conduct further research to discover the causes or the extent of disparities.”
In this report, Brookings present new analyses of restricted-use data from the Department of Education’s Baccalaureate and Beyond (B&B) 93/97 and 08/12 surveys, which follow graduates from the 1993 and 2008 cohorts through 1997 and 2012, respectively. We supplement with additional Department of Education and Census Bureau data, in order to document the vast racial disparity in student debt, explore possible causes, and discuss policy implications. Importantly, the B&B surveys are linked to administrative NSLDS data on student loan borrowing, repayment, and default rather than relying on self-reports. The B&B:08/12 does not yet follow students as long as its 1993 counterpart (which ultimately followed students for 10 years post-graduation), but already provides sufficient follow-up to reveal distressing racial disparities.
The full report, Black-White Disparity in Student Loan Debt More Than Triples After Graduation