Black Student Loan Debt Regrets

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66% of Black borrowers say they regret taking out student loans

Student debt in America disproportionately affects Black borrowers, as reported by CNBC. Currently, 86.6% of Black college students take out federal loans to attend four-year colleges, compared to just 59.9% of white students.

Many Americans believe that student loan debt is beneficial, however, a large number of Black borrowers aren’t reaping these benefits, and the ongoing pandemic has only worsened this crisis. Instead, Black borrowers “believe income-driven repayment plans are a lifetime debt sentence”.

For many Black borrowers, student loans are not considered to be “good debt,” according to a study titled Jim Crow Debt by The Education Trust’s Senior Research Associate Jonathan Davis, PhD and Jalil Bishop, PhD.

The study, based on nearly 1,300 Black borrowers, highlights the parallels between student debt and the racial wealth gap. More than half of Black borrowers in the study disagree that student loans contribute to racial equality (58%) or help them to build wealth (61%). Sixty-six percent regret taking out education loans that now seem unaffordable.

The desire for high paying jobs and financial freedom puts Black students in a bind, as their need for affordable access to higher education leads them to attend colleges with “less resources and lower endowments,” and take out more loans than someone at a better-funded institution, according to Dr. Bishop.

And after graduation, Black borrowers are “navigating labor markets, where they’re increasingly facing discrimination that then requires them to have to return back to higher education because they believe a graduate degree will help them be a buffer against some of that labor market discrimination,” he tells CNBC Make It. According to the Economic Policy Institute, even Black workers with an advanced degree experience a significant wage gap compared with their white counterparts, with Black workers being paid 14.9% less than white workers.

For decades, federal policymakers have “ignored the racial and economic evidence of inequality in student loan debt…insisting that canceling all student debt is the best solution to the crisis”, according to to report released by The Education Trust. Advocates believe limiting student loan debt cancellation harms Black borrowers the most and would prefer that the government cancel the loans rather than offer lower interest rates.

References:

  1. https://www.cnbc.com/2021/11/04/66percent-of-black-borrowers-say-they-regret-taking-out-student-loans.html
  2. https://edtrust.org
  3. https://www.cnn.com/2021/10/20/us/black-borrowers-debt-study/index.html
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