- 66% of Black borrowers regret taking out student loans
- Young Black adults take on 85% more education debt than their white counterparts
Parallels between student debt and the racial wealth gap are astonishing, leaving many Black student loan borrowers regretting their higher education loans. While 86.6% of Black college students take out federal loans to attend four-year colleges, only 59.9% of white students are impacted by student loan debt. More than half of Black borrowers, 58%, disagree that student loans contribute to racial equality or help them to build wealth, according to the Jim Crow Debt study by The Education Trust.
Why This Matters: An insightful quote by Nelson Mandela states “education is the most powerful weapon which you can use to change the world”. However, in American society, education comes with compromises such as student loan debt, which places a burden on Black students’ success. A large number of Black borrowers are not witnessing “good debt”, according to the study. The problem persists in the corporate world taking into consideration that Black workers are paid 14.9% less than white workers.
Moreover, young Black adults take on 85% more education debt than their white counterparts, and that disparity compounds by 7% each year after the borrowers leave school. The accumulated debt prevents students of color from focusing on their possible financial goals such as buying a home, driving a paid off car or simply investing to work towards building generational wealth.
The abolishment of student debt is a step towards narrowing down the racial wealth gap for young families. According to the Education Department, “fewer than half of all borrowers have paid even $1 toward the principal of their balance five years into repayment”. Lastly, HBCU students are also most likely to be in non-remittance over a 12-year period.
What’s Next: It is clear that the cancellation of up to $50K of student loan debt per borrower would not only bring peace of mind to students of color, but it would also increase the wealth of Black Americans by 40%. It is definitely possible to initiate a positive long-term impact on racial wealth gap by tackling the inequities that hang on to the students’ college debt.