Half of All Black Student Borrowers Default on Their Student Loans

Nearly half (49%) of all black student borrowers default on their student loans 12 years after entering college. This is true even of students who earned a bachelor’s degree and includes 75% of borrowers who dropped out of for-profit colleges.

That’s according to data from the U.S. Department of Education, which earlier this month provided long-term outcomes that looked at the race of student loan borrowers.

Senior Director, Postsecondary Education Ben Miller at the Center for American Progress, a public policy research organization, has called the situation a “crisis,” and says the Education Department can no longer “ignore the interaction of race and student loans.”

I spoke with Miller by email to learn more.

Race and Student Loans

Is this analysis true?

Sadly, if you think about the experiences of African Americans in terms of wealth accumulation and employment, I do think these findings make sense. We know that the average African American household has disproportionately less generational wealth than the average white family and that there has been little improvement in employment discrimination. You need money to pay back student loans, and if you cannot get a job or fall back on wealth to make payments you will struggle.

What are the top three things black students need to know before they borrow money to pay for college?

The takeaway here is NOT that African American students shouldn’t go to college. The results for African American students who completed a bachelor’s degree are not where we’d like them to be, but they are better than those for students who dropped out or finished lower level credentials.

I advise asking the school three questions:

1) What is the graduation rate for students who look like me? Overall numbers can mask gaps.

2) How do students who look like me fare on their student loans? If they aren’t repaying, is that because they went to graduate school?

3) What do you think my total borrowing amount might be? A lot of students only think about what they have to borrow for the first year, but most programs are multiple years long. It’s important to try to grasp the bigger picture of borrowing for the whole program.

What are some solutions?

First, we cannot turn a blind eye to this anymore. The Education Department needs to track results by borrower race and ethnicity so we can see where worrisome results are most prevalent and which institutions are doing better.

Second, we need to identify policies at the federal, state, and institutional level that may seem race-blind but have racial effects. For instance, do states sufficiently fund institutions that enroll large numbers of African American students? Do policies around minimum grade point averages for retaining financial aid cause African American students to lose their aid at higher rates? Do policies deeming if students are college ready disproportionately force African American students into courses that cost money but don’t provide college credit? These are clearly massive systemic issues.

For more, visit the Center for American Progress website.