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Putting Minority Student Loan Borrowers in the Black

///Putting Minority Student Loan Borrowers in the Black

Putting Minority Student Loan Borrowers in the Black

Troubling evidence is mounting that student debt is most burdensome for those who can least afford it.

A 2015 report from the think tank Demos found that African-American and low-income students borrow higher amounts and more often for a bachelor’s degree. At public institutions, 84 percent of graduates who received a Pell Grant graduate with debt, compared with 46 percent of those who did not receive a Pell.

Meanwhile, 63 percent of Caucasian graduates from public schools borrow compared with 81 percent of African-American graduates. Additionally, 57 percent of African-Americans who earn associate’s degrees borrow at public institutions, compared with 43 percent of Caucasian students, and they borrow nearly $2,000 more.

Non-Caucasian borrowers are also struggling more to pay back the debt. A 2007 report from Education Sector, now part of the American Institutes of Research, found that African-American students defaulted on their student loans at a rate five times higher than Caucasian students, and the default rate for Hispanic students was more than twice the rate for Caucasian students.

Little has changed in the intervening years. Earlier this year, Generation Progress and the Washington Center for Equitable Growth released data showing that neighborhoods with more residents of color had higher student loan delinquency rates.

Add to all this the fact that student loan default and delinquency costs borrowers more – due to collection fees, wage garnishment, tax refund seizure and higher interest rates as a result of bad credit – and it’s easy to see why many are up in arms about student debt disproportionately affecting minorities. After all, higher education is supposed to be an engine of advancement.

If people of color have to borrow more for college because they have less wealth to begin with and then find themselves less able to accumulate wealth after graduation because of the debt they took on, then where does that leave our public policy goals?

It comes as no surprise that advocates, researchers and policy wonks are anxious to dive deeper into student loan outcomes and compare them by borrower race. Unfortunately, though, that may be harder than anticipated.

Earlier this month, the National Consumer Law Center spearheaded a coalition of public interest groups’ request to the U.S. Department of Education to “collect and release the data necessary to learn the true extent of the impact of student debt on communities of color and to work with borrower and consumer advocates to ensure that student loans are a tool for economic advancement and not economic devastation for borrowers of color.”

For its part, the Department of Education has responded with an explanation that its Federal Student Aid division “does not track race or data related to race.” As such, it does not have data, procedures, guidelines or policies to provide.

The NCLC continues to press for data, and it’s anyone’s guess as to how long before the data is released or if it even exists. In the meantime, we can’t wait to assess how big the problem is before we start working on solutions.

Luckily, there are existing free resources that can help non-Caucasian students find scholarships and grants, assess the best level of education debt to take on for their own personal situation, as well as ease the burden of repayment for those who’ve already borrowed.

For example, the Hispanic Association of Colleges and Universities provides Hispanic students with a number of resources to locate scholarships and grants to help them pay for their undergraduate education.

The Thurgood Marshall College Fund is another resource that recently launched a new advocacy campaign, #intheblack, to introduce tools and resources to support the need for knowledge about student loan repayment and overall financial literacy for Historically Black College and University students and parents. Full disclosure: American Student Assistance, which authors Student Loan Ranger, is a member of the #intheblack coalition.

HBCUs disproportionately enroll low-income, first-generation and academically underprepared college students. Only 22 percent of HBCU graduates leave school with no debt, compared to nearly double the number of graduates at non-HBCUs.

The campaign goal is to get more students out of debt – or out of being in the red – and financially in the black, as the campaign hashtag implies, through the educational web resource and a student loan repayment advocacy and engagement conference in Washington, D.C., for 50 HBCU students this September.

Additional resources available to all students are the U.S. Department of Education’s Repayment Estimator and the Consumer Financial Protection Bureau‘s wide range of tools on paying for college and repaying student debt.

Ensuring greater equality for all student loan borrowers won’t happen overnight. But by using data to get a firmer grasp on just how bad the problem is and taking steps to proactively educate students and families, we can start to address this social challenge.

Source: U.S. News & World Report