Abstract
The current higher education financing regime sediments and exacerbates inequality, and student loans adversely affect the Black-White racial wealth gap. Black students—and students at for-profit universities, who are more likely to be students of color—often face the greatest challenges as they try to finance their degrees with student loans. They take on more loans, amass higher amounts of loans, and experience greater difficulty in paying off loans. Frequently without family financial wealth to support repayment and facing ongoing discrimination in the labor market,8 Black borrowers are much more likely to experience longterm financial insecurity due to student loans. Would anybody knowingly design a system where, two decades after starting college, many Black borrowers still are paying on virtually all of their student loans, while for the typical White borrower, a minimal debt burden remains? Would anybody knowingly design a system whereby 38 elite colleges have more students who come from families in the top 1 percent than students who come from the bottom 60 percent? Elite colleges, to be sure, historically served upper-class White males, yet access gained by
women and students of color has created only a lukewarm diversity in the context of today’s higher education financing regime.
This report highlights how student loans often create a long-term debt burden that blocks wealth accumulation, rendering mobility more fragile and impeding long-term security, particularly for young Black borrowers. While the crisis has grown nationally for all groups in recent years, the data below underscore that Black students are particularly harmed by the current student loan system. The role of higher education financing in contributing to the racial wealth gap and its widening are detailed in this report.