There's a growing racial disparity in student loan debt between blacks and whites
The pursuit of higher education can be expensive. Many people graduate from college with a degree and crushing student loan debt to match.
This is especially true for black Americans who, just a few years after graduating, owe nearly twice as much in student loans as their white peers. That's according to a new study by a pair of Columbia University researchers, who analyzed U.S. Department of Education and Census Bureau data from 1993 and 2008 graduates.
Black college graduates owe $7,400 more on average than their white counterparts the moment they graduate with their bachelor’s degrees. But over the next few years, the black-white debt gap more than triples, according to the study.
White borrowers owe about $28,000 in student loan debt four years after earning their undergraduate degree. Black borrowers owe an average of nearly $53,000.
It's a racial gap that has climbed nearly 14-fold over the past 15 years, according to Bloomberg. Judith Scott-Clayton is an associate professor at Columbia University’s Teachers College and study co-author. She told The Wall Street Journal:
I was shocked when I saw these numbers. We’ve been hashing them for months trying to see, ‘Are we missing something?’
So why is there such a wide disparity in student load debt between blacks and whites?
Various factors can be attributed, like the fact that black students tend to owe more starting out because their families typically have less wealth and savings than white families. Or that black Americans tend to earn less than their white counterparts regardless of educational attainment, contributing to their inability to pay down their debt.
But the biggest reason? Graduate school.
According to The Atlantic:
Forty-five percent of the black-white gap is a result of differences in borrowing for post-baccalaureate studies. While 40% of black college graduates pick up debt to pay for these courses, only 22% of white graduates do the same. One factor is that blacks with bachelor’s degrees are more likely to go to graduate school at all. Almost half of black graduates the researchers studied enrolled in graduate school within four years, compared to just 38 percent of white graduates. But crucially, of the black graduates who continue their studies, 28 percent sign up at a for-profit school, compared to less than 10 percent of their white peers.
Study authors stress that a graduate degree can be a good investment. Studies show those with graduate degrees make significantly more than people who stop after a bachelor’s degree. But for black students it's riskier because they are more likely to accumulate even more debt and take longer to graduate.
Researchers also found black borrowers have a default rate of 7.6% within four years -- three times the rate of white graduates; and black graduates with debt are more likely than white graduates to have interest accumulate faster than they pay off the balance of a loan.
Pauline Abernathy is executive vice president of the Institute for College Access and Success. She tells Inside Higher Ed the study underscores the need for the Department of Education to collect institution and student level data on student borrowers:
It stands to reason that the disparities for more recent students could be even greater than what is in this report.
You can read the full report published by the Brookings Institution here.