Race and Debt

The College Board's Advocacy and Policy Center reports that "too many students are borrowing more than they are likely able to manage" and this is particularly true for black undergraduates. According to researchers, fully 27% of black BA recipients borrow more than $30,000 for college, compared to 16% of white BA recipients. The gap is especially large among independent students (those who are a bit older, are parents, or independent for other reasons)-- more than 1 in 3 black independent students who earn BA's graduate with high levels of debt, compared to less than 1 in 4 white independents.

This is a trend we need to know more about. There have been a few articles written about race differences in college financing patterns and receptivity to financial aid, but none have been especially adept at sorting out the underlying reasons for variation by race/ethnicity. Are the patterns attributable to factors which map onto race in this country (e.g. poverty, segregation, school quality, etc) or to factors more closely related to beliefs, expectations, values, etc?

I'm working on this question in the context of a study I co-direct in Wisconsin. The Wisconsin Scholars Longitudinal Study is exploring the impact of need-based financial aid on college outcomes. We've got very rich survey data from students' first two years of college, as we explore it we're beginning to learn a lot. For example, the data (from a sample of more than 2,000 Pell Grant recipients attending 2-year, 4-year, and technical colleges) indicate that black undergraduates are far more likely than white students to know who to contact in their financial aid office and to seek out help, yet at the same time they are less likely to feel comfortable doing so. They are twice as likely as white students to fill out the FAFSA without any help, and almost half as likely to get FAFSA assistance from a parent. In their first year of college alone, they are more than twice as likely to report receiving a private, non-federal loan.

As the College Board report concludes, too much college debt can contribute to future financial insecurity. Many of us hope that increasing rates of educational attainment among students from racial/ethnic minority backgrounds will perpetuate a virtuous cycle benefiting all families-- but those prospects will undoubtedly be diminished if debt takes its toll.

Image courtesy of John Fewings