Editor’s note: Black students are more likely than their peers to borrow money for college, struggle with repayment and default on student loans. With the debt problem for black students in particular reaching urgent levels, The Education Trust and The Hechinger Report have partnered on a series of op-eds to amplify the voices of people studying solutions to the black student debt crisis.
Black Americans have to work harder and pay more to receive the same benefits and opportunities as their white and non-black peers. This phenomenon is commonly called the “black tax.” Unfortunately, the coronavirus pandemic is raising the cost of being black in the United States even more.
It’s devastating, but not surprising, news that black Americans are suffering at disproporationate levels from the coronavirus. Covid-19 does not discriminate, but people do. If you’re black in America, you’re less likely to have health insurance and more likely to have conditions like diabetes or hypertension, which increase the risks of contracting and dying from Covid-19.
If you’re black, you’re also more likely to have a low-paying job that requires social contact, and you’re less likely to be able to work from home or have savings that would allow you to stock up on basic supplies and withstand the financial strain of unemployment. For black people living at the margins, the ugly truth is that no matter the crisis, the highest cost will be borne by them.
The student debt crisis is no exception.
Black students are more likely to borrow, borrow more, struggle with repayment and default on their student loans than their peers. Default occurs after a borrower is 270 days late, and it is the most disastrous financial outcome of student debt. Defaulting not only ruins a person’s credit, but makes future borrowing more expensive and can make it harder to get a job, rent an apartment or buy a house or car. Half of black borrowers who entered college in the 2003-04 academic year defaulted on their loans within 12 years. What’s more, protective factors like degree completion or high family income, which would normally shield borrowers from adverse debt outcomes, don’t necessarily protect black borrowers. A black bachelor’s degree recipient is more likely to default than a white college dropout.
Related: OPINION: Can debt relief and investment in HBCUs level the playing field for black students?
And that was before the coronavirus crisis.
So, as Congress considers how to respond to this deepening public health and economic disaster, it must take into account the pain that’s being acutely felt by black Americans. That will also mean confronting the black student debt crisis, which was out of control well before the pandemic and will only intensify as the economy craters.
But let’s be clear: The student debt issue has reached crisis levels not only because it affects more than one-third of black people who go on to college and the 30 percent of black adults who have an associate degree or higher, but also because it affects black people more broadly.
Those who forgo a postsecondary education out of fear of going into debt often face greater social and economic challenges, given that good jobs tend to be reserved for people who’ve gone to and graduated from college. Meanwhile, those with student debt may be less able to invest in their families and communities. And, according to an analysis by economists at the New York Fed, student loan balances are greater and rising faster in majority-black neighborhoods than in majority-white ones. Default rates are higher in black neighborhoods, too. That has far-reaching consequences, leaving many black people with a lower net worth and less money for long-term savings or a down payment on a house, not to mention fewer resources to invest in local schools, businesses and communities.
How higher-ed policy exacerbates this crisis
State higher-education policy isn’t helping matters. Most states slashed higher-education funding in the wake of the Great Recession, and 10 years later, funding still hasn’t recovered. Now, because of the pandemic, and unless there’s assistance from the federal government, it’s likely to sink further.
On average, states spent $1,220, or 13 percent, less per student in 2018 than in 2008, after adjusting for inflation. Meanwhile, in response to deep cuts, colleges hiked tuition and fees, leaving students and their families to pay more. This has been particularly hard on black students, who, as noted earlier, have less family wealth to fall back on. But don’t take our word for it. Research by the Center on Budget and Policy Priorities shows that while the average net price for a public four-year university comprised 23 percent of national median household income in 2017, it took up a whopping 40 percent or more of black median household income in 17 states.
What’s more, states spend less on the colleges that most black students attend. This means fewer resources for academics and student-support services, and less financial aid for black students.
Federal higher-ed policy isn’t helping either. Fifty-eight percent of black students are Pell Grant recipients, compared to 32 percent of white students. Unfortunately, as black enrollment in higher education has inched up over the decades, the purchasing power of the Pell Grant, the nation’s largest federal need-based aid program, has plummeted.
In 1975, the Pell Grant covered 79 percent of the cost of attending a public university. Today, Pell Grants cover 28 percent. Many black students have had to take on loans to make up the difference, and they’ll be even more hard-pressed to do so now.
Meanwhile, the federal government’s failure to protect students from predatory for-profit institutions is making matters worse. This lack of oversight disproportionately harms black students because they are overrepresented at for-profit institutions. Three out of every four black borrowers who attended for-profit colleges and did not complete their degrees defaulted on their loans.
A racial justice problem requires racial justice solutions
Yet, while black students and families continue to bear the brunt of this crisis, conversations on ways to address it often omit their voices. This series aims to change that. The Education Trust, in partnership with several black scholars, sought to analyze why black borrowers struggle with student debt as well as to offer actionable policy solutions. We invited experts from the black academic community to share their bold ideas, plans and solutions to the black student debt crisis. Their essays cover the following topics: the racial wealth gap; racial capitalism; strengthening borrower protections and regulations of for-profit colleges; the need to invest more money in institutions that serve the greatest share of black students, like Historically Black Colleges and Universities (HBCUs) and predominately black institutions (PWIs); and the need for large-scale college affordability policy and reparations.
While there may be no single fix to this crisis, which has assumed greater urgency in the midst of the pandemic, the recommendations put forth here might serve as a first step in addressing it.
This story about black student debt and the coronavirus was produced by The Hechinger Report, a nonprofit, independent news organization focused on inequality and innovation in education, in partnership with The Education Trust. Sign up here for Hechinger’s newsletter.
Tiffany Jones is director of higher education policy at The Education Trust.
Victoria Jackson is a senior policy analyst for higher education at The Education Trust.
HBCU’s and predominantly Black-serving institutions are largely responsible for the rise in the Black middle class in America. Yet, these institutions have weak endowment funds that could relieve their graduate’s debt burden. Over the years, of all the tremendous things that they have succeeded in doing, they have failed to teach their students the importance of wealth-building and giving back. For emphasis, I repeat, “wealth-building and giving back”. Now, they cannot “make” them give back, but they need to do a better job of encouraging it. Wealth-building and giving back is not the answer to the student debt crisis, but if these institutions had larger endowment funds, they could give larger grants and thus lessen the need to take out “more” loans.