For African Americans, student debt makes college riskier

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Student debt worsens wealth inequalities between white and black Americans.

This is what to remember from a new to study titled “Racial Disparities in Student Debt and the Reproduction of the Fragile Black Middle Class”, published this year in the journal Sociology of Race and Ethnicity.

Researchers found that young black adults take on 85% more debt than their white counterparts – and that the disparity grows by 7% every year after borrowers leave school, as African Americans face challenges. one-off reimbursements.

Of course, student loan repayment is a pervasive problem. Less than half of all borrowers have paid even $ 1 on the principal of their balance five years after the repayment started, according to the Department of Education.

But for black borrowers, the picture is even bleaker. White borrowers pay off their student loan debt at a rate of 10% per annum, compared to 4% for black borrowers. As a result, 15 years after leaving college, black adults hold 185% more student loans than white adults.

“The racial wealth gap is both the largest and the fastest growing among those with a university education,” said Jason Houle, assistant professor of sociology at Dartmouth College and co-author of the study. . “We stress that student loan debt is potentially one of the reasons this has happened.”

Data for the study was taken from the National Longitudinal Study of Youth 1997 Cohort, a nationally representative sample of over 8,900 respondents who have been surveyed almost every year since.

The researchers calculated that student debt contributed almost a quarter of the wealth gap between blacks and whites, shown below.

Why are black student loan borrowers more in the red? Researchers cite a barrage of challenges.

Black families and students often have less wealth to draw on than their white counterparts, making them more likely to turn to student loans to cover rising college fees. In addition, more and more black students are attending for-profit colleges, many of which have come under scrutiny for their high cost and inability to adequately prepare their students for employment.

Black youth are also more likely to have private loans, which often come with less consumer protections and higher interest rates than federal loans.

So while black Americans have enjoyed better access to college over the decades, “they’ve made these gains in terms of exploitation,” the researchers conclude. Houle pointed to previous research that calls this phenomenon “predatory inclusion. “In this study parallels are drawn between the student loan and the housing market.“ Black Americans now have more access to homeownership than before, but this is largely on predatory terms, ”Houle said. . “This similar thing is happening in the student loan market.

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