How the Student Loan Debt Crisis Disproportionately Affects Black Americans
Student loan debt is a nationwide crisis that has received increased attention from the Biden administration and many Congressional Democrats. According to CNBC, studies revealed that the cost of college has soared by 25% in the last ten years. However, while debt incurred for any student can be daunting, the burden disproportionately affects black students, as the following statistics illustrate:
· In 2020, the average Black graduate had $7,400 more in student loan debt than their white counterpart.
· 86.6% of black students borrow federal loans to attend four-year colleges, compared to 59.9% of white students
· Black graduates at HBCUs took on 32% more debt than peers at other types of institutions.
· Additionally, white borrowers pay down their education debt at a rate of 10% a year, compared with 4% for black borrowers and more than 50% of Black borrowers claim their net worth is less than what they owe on those loans.
· Black graduates are also nearly five times more likely to default on their loans than white peers.
As we highlighted in previous blogs, there are explanations for these vast disparities. Many black college students of HBCUs and MSIs are first-generation Americans and cannot rely on family wealth to help with their education. Younger black people are also less likely to be financially savvy, resulting in lower credit scores, meaning they pay much higher interest rates for loans. And blacks earn less money out of college, therefore, starting their careers heavily burdened by debt.
The Our Money Matters (OMM) initiative is designed to address these challenges by providing free tools to HBCU/MSI students in order to narrow the financial literacy gap. It’s one of the most recent programs started by the HBCU Community Action Development Coalition (CDAC) with a generous grant by the Wells Fargo Foundation. HBCU CDAC was founded over ten years ago to help bring stakeholders together, such as HBCU's, MSI's (minority-serving institutions), CDCs (Community Development Corporations), and the Community Economic Development Industry. By connecting these organizations, HBCU CDAC helps build long-term economic opportunities for students, small businesses near the campuses, and the broader surrounding community.
Student loan debt is also one of the reasons for the widening racial wealth gap. The Roosevelt Institute, a liberal think tank based in New York, found that white households headed by people between the ages of 25 and 40 have 12 times the wealth on average than black households. The ratio shrinks to just five times the wealth by eliminating student debt. However, while many other forms of systematic racism need to be addressed to eliminate the gap, this would be an essential first step. As Ben Miller, vice president for postsecondary education at the Center for American Progress, stated, "It is time for the federal government to make sure that the tens of billions of dollars in student loans it provides each year really are making lives better."
For more information on OMM, click here.
To read other OMM blogs, click here.
To learn more about the HBCU Community Development Action Coalition, click here
Please see below to access information about financial assistance available at HBCUs.
Allen University provides Grants & Scholarships, Outside Scholarships, Loans, and Veteran Benefits. The grants and scholarships are remarkably diverse, ranging from federal grants, work-study, and South Carolina citizen-state grants to academic, institutional, visual arts, and athletic-based scholarships. Other forms of financial help include a guide on completing federal loans for parents and students.
Bowie State University offers similar forms of aid. Under financial assistance, videos and help center numbers explain financial aid formats and application processes. Bowie state displays featured scholarships, available scholarships, and additional resources required to search for scholarships.
Lincoln University accepts forms of outside scholarships and aid. The website goes through a series of steps for first-year students to follow. The measures include reviewing the cost of attendance, completing authorization, loan entrance counseling, applying for parent plus loan, and more.
Miles College Financial Aid provides a record giving an overview of the college's financial aid. In the document, you can find links to federal financial aid resources, financial aid forecasters, the student loan advisory, and applications for assistance. Additionally, the paper provides requirements for applying for work-study and repaying student loans.
Morris Brown University provides plenty of resources for scholarships on its website. Information for general scholarships and institutional scholarships can be found underneath the scholarship category. Tips for obtaining outside scholarships and resources for outside scholarships are also listed underneath the tab.