How student debt is perpetuating racial inequality

Published: May 23, 2015 7:34 a.m. ET





Student debt is not an equal opportunity burden.

African-American students are more likely to borrow to attend a public college than their white and Hispanic counterparts, according to a report released Tuesday by Demos, a left-leaning think tank. Black students attending public universities are also typically saddled with higher levels of debt, the report found.

When it comes to borrowing for private school, black and Hispanic students outpace their white colleagues in both their likelihood to borrow and average levels of debt.

The nation’s yawning wealth gap is a major reason why minority students end up borrowing more for college. Structural racism has created disparities in home ownership rates, income and other wealth-building vehicles, providing minority borrowers with fewer resources to tap to pay for college, on average.

This racial debt gap will likely only increase the wealth disparities between white Americans and their minority peers. That’s because elevated levels of student debt often get in the way of buying houses, saving for retirement or building wealth in other ways, said Mark Huelsman, a senior policy analyst at Demos and the author of the report.

“The more we are putting the burden of debt onto students and communities that we’ve traditionally overburdened, I think that only stands to exacerbate the problem,” Huelsman said.

Theoretically student debt should work as somewhat of an equalizer, providing a way for those who can’t afford college to finance it and reap the benefits. But the Demos report shows that the students who could benefit the most from a student loan are also the most likely to be burdened by it.

Hispanic, black and low-income students are more likely to drop out of college than their white and moderate to high-income contemporaries, according to Demos. Students who borrow to attend school but don’t graduate, are left with the debt but none of the employment and earnings advantages a degree provides. These borrowers are the most likely to default on their student loans.

“We’re burdening the same students with debt who don’t end up with the credential which is the most valuable piece of the puzzle,” Huelsman said.

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