Why Black Borrowers Are Defaulting On Their Student Loans
As if college students and recent grads already don’t have enough on their mind, now comes a study that revealed Black students have a higher rate of defaulting on their student loan payments than others.
“Black students who started college in 2003 had a 50-50 chance of defaulting on their federal student loans, according to a new analysis of government data — a virtual coin-flip of default that stands in stark contrast with a 21 percent default rate for white borrowers,” reported Buzzfeed. This is based on an analysis conducted by the left-leaning Center for American Progress.
In fact, a whopping 75 percent of Black students who attended for-profit colleges defaulted on their school loans by 2015. “I don’t think there’s an overall student loan crisis,” said Ben Miller, the director of postsecondary education at the Center for American Progress. “But when you look at this data, that’s a crisis for African-American borrowers.”
It takes African-Americans borrowers a lot longer to even start paying back their loans, meaning interest racks up. On average, it takes a Black borrower more than 12 years to start making payments on their loans. By then, what they originally owed has grown an insurmountable 113 percent.
Why is this happening? Because College-educated Black women still are not typically landing high-paying jobs. “After 12 years, Black borrowers with bachelor’s degrees owed 114 percent of their loan balance, while white borrowers owed less than half — 47 percent — and Latino borrowers owed 79 percent of their original loan total,” reported Buzzfeed. And as a result, many of the borrowers eventually default on the loans.
Another reason is the lack of wealth in the Black community. “Middle-income white families have nearly eight times as much wealth as Black families, meaning that Black students must borrow more money, and often have much less of a safety net in case of emergencies, which leads to default,” reported Buzzfeed.