Gaps in debt levels and default rates between White and Black college students have long been a concern. But they grew even more alarming after new data from the Department of Education allowed researchers for the first time to track debt and default for as long as 20 years after the start of college.
Analyses of this data by myself and others captured the attention of a group of U.S. senators, who asked dozens of experts for policy recommendations on how to shrink disparities in student loan outcomes and college completion. I laid out a series of proposals in a letter last month to senators Doug Jones (D-AL), Elizabeth Warren (D-MA), Kamala Harris (D-CA), and Catherine Cortez Masto (D-NV), which I summarize below.
How Big Are the Gaps in Debt and Default Rates?
Black college graduates start out owing more than their White peers, but the gap in student loan debt more than triples over the next few years. Growing interest and borrowing for graduate school lead to Black graduates holding nearly $53,000 in student loan debt four years after graduation, almost twice as much as White graduates.
The picture gets even worse further out from graduation. While cumulative default rates continue to rise for all borrowers between 12 and 20 years after students start college, Black graduates with a bachelor’s degree default at five-times the rate of White bachelor’s graduates-21 percent compared with 4 percent. Among all college students who started in 200304 (not just borrowers), 38 percent of Black students defaulted within 12 years, while 12 percent of White students defaulted.
Many of these students who defaulted attended for-profit colleges, where almost half of students default within 12 years of college entry. But even after accounting for student and family background characteristics (such as family income, wealth, and parental education); total amounts borrowed; college experiences (including type of institution attended, degree attainment, and college GPA); and post-college employment status and income, there remains an 11-percentage-point BlackWhite disparity in default rates. Continuar leyendo «Shrinking Racial Gaps in Student Debt and Default: Recommendations to Congress»