Debt Burden on Black Families Throws College Into Question
By Alexandra Bacchus
Black students take on more debt for the same degree than other students
College-educated black families earn about $68k of lifetime net worth
It’s no secret that the cost of college is climbing faster than American wages and the inflation rate, 8x faster, to be exact. Yet even as costs climb, the importance of earning a college degree remains. Black families typically have less wealth and fewer resources to pull from, which means they borrow more money for the same expensive degree. Specifically, college-educated white families earn about $400k of lifetime net worth, compared to $68k earned by black families with the same degree.
Why This Matters: Students of color have to focus on paying off their student debts for longer, meaning they are unable to focus on other financial goals like buying a home, paying off credit card debt, and saving for retirement. Studies show that white men have paid off 44% of their student loans twelve years out of college, while black women owe 13% more. What's more, the amount of loans that are 90 or more days delinquent has not changed much since 2012, proving that the financial burden is still high even as unemployment rates get lower, now at 6.7% for African Americans and the economy improves.
However, individuals with the power to make changes are stepping in when they can. Robert Smith, a billionaire who gave the Morehouse College commencement speech last month, announced that he would pay off the class of 2019’s student debt. The outcomes of his gesture will be a useful way to study how individual wealth accumulation changes when the debt burden is taken away.
Situational Awareness: Policy experts have been discussing solutions on how to alleviate student debt for Americans everywhere, although this would have a profound effect on the black community. Partial debt cancellation, full cancellation, and protecting Social Security funds from debt collection are a few proposed policy initiatives. Shockingly, up to 15% of Social Security payments can be pulled from to pay off defaulted loan debt, a consequence on retirement that is difficult to grasp in the face of current financial trouble. The unspoken question is a big one: is higher education worthwhile if it comes with all this debt?
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