Education

The Student Loan Bubble Is Crushing Black People

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Blake Neff Reporter

Black college graduates are being burdened with far more student debt than their white peers and are struggling more to pay it off, according to a new paper analyzing student loan trends.

The paper, published by the Brookings Institution, examines decades of student loan data and finds that exploding student loan burdens are hitting blacks much harder than any other group.

At the moment of graduation, the typical black college graduate owes about $23,400 in student loans, compared to a white average of $16,000, which is nearly 50 percent less. That $7,400 gap is already sizable, but it increases with the passage of time. Black graduates are more likely to default on their loans (7.6 percent default within four years, compared to less than 3 percent of whites), and are more likely to make only small payments on their loans. They’re also more likely to take on additional debt in order to attend graduate school.

As a result, four years after graduation nearly half of all black graduates owe the same amount or more on their student loans as they did at graduation. Less than 20 percent of white students have the same problem. (RELATED: Obama Admin Says $1.3 Trillion In Student Debt Is Helping The Economy)

Additionally, black graduates typically have nearly $25,000 more in student debt than white grads, triple the initial gap and greater than the amount either group initially borrowed. Their average loan burden of roughly $52,000 also dwarfs that of any other group.

Notably, this is a shift from just 24 years ago. Brookings found in 1992 that student debt figures were not only lower but also more evenly distributed, with blacks owing just slightly more than whites four years after graduation. Since then, student debt for every other group has roughly tripled and for blacks it has quintupled.

Brookings fingers many different culprits for the massive gap, such as lower income levels for black graduates compared to their white counterparts, the trend of  black grads attending costly for-profit graduate schools, and the higher likelihood of blacks attending graduate school but not completing a degree.

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