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The shocking racial divide in student debt

Black college graduates have way more debt than previously thought

Levels of student debt for black college graduates are much higher than previously thought, according to a new report from the Brookings Institution.

Four years after graduating in the 2007-08 academic year, black college graduates carried an average of $53,000 in student debt, vs. an average $28,000 for white students who graduated in the same year. It’s also roughly five and a half times the debt black students who graduated in 1992-93 were dealing with four years after graduation ($8,700).

Levels of student debt have surged for students of all racial backgrounds since the 1990s, but debt for black students who graduate from college has risen much more quickly to much higher levels, the authors of the paper say. And some of the reasons are different from what they used to think.

“I was shocked, to the point that I had to spend several months convincing myself that it was true, that it wasn’t a mistake,” said Judith Scott-Clayton, an associate professor of economics and education at Teachers College, Columbia University. Scott-Clayton wrote the paper with research associate Jing Li.  

Other research has shown African-Americans carry higher levels of student debt than whites. But much of that research has suggested that the discrepancy was related to the fact that black students are much less likely to complete their degrees, leaving them with high levels of debt and lower earning power than students who finished college.

But Scott-Clayton’s paper looks specifically at students who have graduated with bachelor’s degrees, and she found that levels of student debt for blacks grow much more quickly than thought after graduation.

“What’s shocking is how massively it expands after graduation. I don’t think people realize that,” she said.

Why? Black graduates pay off their students debts slowly, which may be related to the growing earnings gap between blacks and whites, the paper says. The accumulated interest payments over longer times add significantly to the debt level.

Also, black student debts rise because black students go to graduate school at higher rates than white students. According to the Brookings paper, 47 percent of black students enroll in graduate school within four years of graduating college, compared to 38 percent of white students.

Many of those black graduate students, 28 percent, go to for-profit graduate schools, the paper says.

“It’s concerning that so much of the increase in graduate schools for black students have been at for-profit institutions,” Scott-Clayton said, noting that the for-profit sector has been the subject of increased government scrutiny in recent years.

For-profit schools are far more expensive than options such as community colleges, though there is some evidence that community college degrees are actually more respected by employers.  

And last year, for-profit chain Corinthian Colleges filed for bankruptcy protections, amid allegations of fraud. This year another of the country’s largest for-profit chains closed in September after it was banned from enrolling students receiving federal financial aid and accusations of fraud. The takeaway from the paper is stark.

“Graduate enrollment is a good investment on average,” the paper says. “But for blacks, it entails significantly more financial risk than it does for whites.”


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