It’s easy to talk about how student loans are impacting the quality of life for millennials. They’re delaying life decisions until later in life because this repayment of loans is taking priority. Yet, there’s an even larger wealth discrepancy no one is talking about. This problem is hurting young black Americans more than it is whites.
A new study has come to light, published by Sociology of Race and Ethnicity. The study is called, “Racial Disparities in Student Debt and the Reproduction of the Fragile Black Middle Class.” The details in this report are truly shocking. While most college students in the modern era struggle with paying back their student loans, blacks have it much worse.
According to the study, whites pay their debt down at a rate of 10% per year. It’s 4% for blacks. After fifteen years, blacks still hold 185% more of their debt than their white counterparts. Blacks also take on 85% more debt to go to college than white students. All of these this is only widening the wealth inequality gap between whites and blacks.
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Student Loans and Unique Challenges
This new study is revealing the unique challenges black Americans still face. They don’t have as much familial wealth to draw from to go to school. As a result, they take on more debt. After they graduate, finding comparable work is more difficult. These unique challenges only add to the racial wealth inequality in this country.
“The racial wealth gap is both the biggest and has grown the fastest among those with a college education,” said Jason Houle, assistant professor of sociology at Dartmouth College and co-author of the study. “We point to student loan debt as potentially one thing that explains why that’s happened.”
This study has highlighted that as much as 25% of the wealth gap between whites and blacks is caused by student loans. The information was gathered from a previous study, conducted in 1998. It was called the National Longitudinal Study of Youth 1997 Cohort. Over 8,900 students have responded each year since that study.
Upward Mobility at Risk
One of the other challenges to black students are the types of loans they’re taking out and the schools they attend. Black students frequent for-profit schools and take out private loans. For-profit schools have recently come under fire for their predatory advertising. Those often-expensive schools make false promises of helping students find work after graduating.
Taking out private loans is dangerous in itself. They have fewer protections for consumers that federal loans have. These two problems combined make black students more at risk. It is true that blacks have gained greater access to college degrees over the years, but that access is under “exploitive terms,” according to the research.
“Black Americans now have more access to homeownership than they did, but it’s largely on predatory terms,” Houle said. “This similar thing goes on in the student loan market. In a world where we have rising college costs and rising student debt. It raises questions about whether or not that engine may be sputtering out.”