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Many American college graduates struggle to student loan debt, and with rising tuition fees, more and more people are finding it difficult to afford a college education. However, not all borrowers experience the pinch the same way.
Due to systemic factors such as racial pay gap, borrowers of color are most likely to face financial consequences stemming from their student debt. In fact, a recent Bank Rate Survey found that 64% of black respondents and about 70% of Hispanic respondents delayed major financial milestones because of student loan debt, compared to less than half of white respondents.
Here’s a breakdown of average US student loan balances by race and demographic disparities.
Top Debt Stats by Race
Black or African American
- black students withdraw the most student loan debt for a bachelor’s degree, followed by white students.
- Black borrowers have a median student loan balance of $30,000.
- Ninety percent of black students take out student loans to pay for their college education, compared to 66% of white students.
- Four years after graduating, black students hold nearly double student debt like their white peers, largely due to differences in interest accrual and borrowing from higher education.
- After graduating from college, 17% of black students are behind on their student loanscompared to 9% of white students.
- out of women undergraduate borrowersthe average black woman has the most student debt, average $41,466.05 one year after graduation.
- Nearly 71% of black undergraduate students are Pell Grant recipients, meaning they come from low-income households.
Native American or Alaska Native
What is the breakdown of student loan debt by race?
Racial Disparities in Student Debt
In a Bank Rate Survey as of April 2022, borrowers of color — especially Hispanic borrowers — were the most likely to report having to delay a financial decision, such as buying a home or saving for emergencies, because of their student debt. Sadly, this is just one of many impacts that students of color face as a result of their student loan debt.
Here are some other key findings from this survey:
- Sixty-eight percent of white respondents said they had never taken out a student loan to pay for their education, compared to 57% of black respondents and 64% of Hispanic respondents.
- Nearly half of white respondents said they hadn’t put off major financial decisions because of student debt, compared to 36% of black respondents and 31% of Hispanic respondents.
- Twenty-four percent of black respondents said they currently have student loan debt, compared to 13% of white respondents and 18% of Hispanic respondents.
- Only 42% of black borrowers who incurred student loan debt said college opened up career and income opportunities. In contrast, 54% of Hispanic and white borrowers believed they would have better career and income opportunities after graduating from college.
- Twenty-three percent of Hispanic borrowers said they put off buying or leasing a car because of student debt, compared to 20% of black borrowers and 21% of white borrowers.
According to research by Brookings InstitutionBlack students experienced the largest cumulative percentage change in median student debt and one of the smallest percentage changes in median income from 2009 to 2019, compared to white, Asian, and Latino students.
Brooking also found that black college graduates owe about $7,400 more than their white counterparts. However, a few years after graduation, this debt gap more than triples for black borrowers.
Repayment of groceries and student loans
The disproportionate effect of student debt on marginalized communities can hurt monthly budgets after graduation. The Ministry of Education estimates that in 2016, black bachelor’s graduates borrowed $53,200; white graduates borrowed $39,500; Asian graduates, $44,800; and Hispanic graduates, $38,000.
Here’s how their average monthly payments break down four years later:
This monthly payment gap can be even greater for borrowers with private student loans, who often charge much higher interest rates.
Higher loan amounts could be a factor affecting default and delinquency rates.
Research by the Institute for College Access and Success shows that 12% of white students do not repay their student loans within 12 years, while nearly 38% of black student loans will default during the same period. The Institute on Assets and Social Policy adds that 20 years after starting college, the typical white borrower is paying off almost 95% of their balance – but the typical black borrower still owes 95% of their principal balance.
The bottom line
Student loan debt in America disproportionately impacts borrowers of color. Almost every aspect of the loan process – from origination to repayment – impacts racial groups differently, with non-white borrowers enduring longer repayment terms and higher loan principal amounts.
Borrowers struggling with federal student loan repayments can take advantage of federal benefits reduce their monthly payments, temporarily defer payments, or seek other repayment options. those with private loans do not have flat relief options like federal loans; however, borrowers can ask their lender about hardship and payment assistance options.