In the middle of general public concern over rising levels of student loan debt, racial disparities in student loan debt are beginning to attract more and more attention, too. A new report from the Center for American Progress finds a large racial disparity in outcomes for black and white students who took out federal loans for their college education. The study examined students who entered college in the 2003-04 academic year and who borrowed money to finance their higher education and examined the status of their loans 12 years later.
“New Federal Data Show a Student Loan Crisis for African American Borrowers” found that African American students owed 114 percent of their original loan amount 12 years after entering college. The data show that the typical African American student who started in the 2003-04 school year and took on debt for their undergraduate education owed more on their federal student loans than they originally borrowed 12 years later.
Nearly one half of all African American students who entered college in the 2003-04 academic year and took out federal loans had defaulted on their payments over the next dozen years while 21 percent of whites who borrowed federal money for college had defaulted on their loans. For those that earned a bachelor’s degree, 21 percent of African Americans defaulted on their loans, compared to 6 percent of whites who earned a bachelor’s degree.
For those students who borrowed money and then dropped out of college without earning a degree, 64 percent of African Americans who entered public four-year colleges defaulted on their loans, compared to 39 percent of whites who borrowed money and did not earn a degree. For black students who entered for-profit institutions of higher education, borrowed federal money, and did not complete their programs, 75 percent defaulted on their student loans.