Black and Low-Income Students Struggle the Most to Pay Off Student Loan Debt, Report Reveals

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The National Center for Education Statistics (NCES) released a report earlier this month showing that African Americans and students from low-income families struggle the most when it comes to student loan repayment.

The report tracked loan data for two cohorts of students — those who entered college in 1995-1996 and those who began in 2003-2004 — and includes information on total amount borrowed, amount still owed, and default status over a 12-year period.

Most notably, data revealed that African American graduates struggle to repay loans more than any other ethnic or racial group, with 49 percent of these borrowers defaulting at least once over the course of 12 years. By contrast, 36 percent of Latino, 21 percent of white, and 11 percent of Asian American students defaulted on their loans.

Borrowers who completed a four-year degree were significantly less likely to fall behind on loan repayment. Of these graduates, however, African Americans still had the highest default rate at 23 percent; black students who dropped out of for-profit institutions had the highest default rate — 75 percent — of any population.

Similarly, African Americans were the only demographic group to owe more on student loans — an average of 113 percent — after 12 years than the amount originally borrowed. Latinos owed an average of 83 percent of the total amount borrowed, while whites owed just 65 percent.

Additionally, graduates from low-income families, regardless of their race or ethnicity, struggled more than individuals from more affluent backgrounds to repay education debt. Those who qualified as low-income in 1995-1996 still owed an average of 77 percent of their student loan debt after 12 years, compared to 72 percent for students from more affluent families. That figure dropped to 59 percent for high-income students entering college in 2003-2004 and rose to 91 percent for their low-income peers. Some say that these findings indicate that student loans, although they make higher education more accessible for many, may actually be hindering socioeconomic growth for many Americans.

In a similar analysis by the Center for American Progress (CAP), the organization calls on the U.S. Department of Education to collect ongoing data regarding race and income for student borrowers in order to better track the effect of loan repayment on underserved populations. CAP notes that repayment data for students entering college after 2003-2004 would likely reveal even greater hardship for minority and low-income students due in part to the growth of for-profit institutions.