Black borrowers take on more student loan debt, earn less, reports show
The nation’s student loan debt continues to rise, and black borrowers are the hardest hit.
According to the latest data from the Federal Reserve, student debt is around $ 1.7 trillion. There are roughly 45 million borrowers who collectively owe more than Alphabet’s current market cap (Nasdaq: Goog). Student loan debt is now ranked as the second highest category of consumer debt. It is second only to mortgage debt and exceeds both credit cards and auto loans.
President Joe Biden has extended the federal student loan payment hiatus until September 30, 2021. However, student loan debt continues to be a major concern for black borrowers. Although white students have higher enrollment rates, black public four-year school students incur more student debt.
“When you look at the data and focus on black borrowers, you see that student loans actually sit at the intersection of a few issues,” says Mustaffa Bishop, postdoctoral vice-president and lecturer at Penn Graduate School of Education, in a press release. “They reflect historical patterns of racial debt traps, current problems in higher education systems, unequal labor market opportunities, and lingering issues of race and racism.”
Black borrowers take on more student loan debt
A Black Millennials study published by Student loan hero shows that black families contribute on average less than $ 6,000 to their students’ studies in 2016. On the other hand, non-black families contribute more than $ 14,000, which allows these students to borrow 35% less in student loans than black students.
This impact of lower education contribution rates than student loans adds up. On average, black students owe almost twice as much as white students to graduate. The Brookings Institution estimates that black graduates owe an average of $ 25,000 more in student loans. While black students owe $ 52,726 in student loan debt. It is estimated that white students have just under $ 30,000 after graduation.
The wealth gap is widening in the workplace. According to Student loan hero, black millennials with bachelor’s degrees earned on average 22% less than their peers in 2019. The pay gap among black graduates aged 25 to 29 increased in 28 states and the District of Columbia in 2014 to 2019.
“Black students are hearing the message that higher education is accessible to them,” says Mustaffa Bishop. [They believe] that loans are the way to get there. [The narrative states] that job opportunities and economic advancement for you and your family will flow from it. Black students run after the promise.
He adds, “But our research shows that every leg of this journey is riddled with inequalities in a way that undermines that promise.”
How Black Borrowers Can Overcome Student Loan Debt Statistics
Student loan debt has had a depressing impact on the net worth potential of black families. A new study from McKinsey & Company has found that about 3.5 million black families (19%) have negative net worth. An additional 4.3 million black families have a net worth of less than $ 10,000. Debt remains the culprit behind the disturbing net worth statistics.
Scholarships are one way to fight the student loan crisis. EnrichHER founder Dr. Rosshawnna Novellus has raised over $ 600,000 to fund her college education. She has obtained four degrees – from baccalaureate to doctorate. – by obtaining scholarships. The key to Dr. Novellus’ success began early. At 15, she contacted more than 200 companies for funding. “
Be specific about what you want and why you want it, ”Dr. Novellus shares with Business intern. “Always follow up with those who give you funding. [Also] reach large and small businesses and organizations.