New Evidence Adds to Troubling Picture for Black Borrowers of Student Loans

For years, experts have worried about the disproportionate level of student-loan debt borne by black students. Two new sources of evidence — federal data and a report on a controversial federal-student-loan program — add to an already disturbing picture.

The federal data come from the National Postsecondary Student Aid Study, which provides the most robust picture of student borrowing, but has been released only every four years (it will come out every two years in the future).

When the 2015-16 data were published, on Tuesday, Robert Kelchen, an assistant professor of education leadership, management, and policy at Seton Hall University, posted a quick analysis of graduate students’ debt by race on his blog.

In 2000, the proportion of black graduate students with no debt was quite a bit lower than for their white, Asian, or Hispanic peers, he found. But that proportion dropped sharply over time. Just more than half of white graduate students had no debt in 2000, a share that dropped to about 40 percent by 2016. By comparison, at the start of the same period, 37 percent of black graduate students carried no debt; by the end, only 17 percent did.

The racial disparities were even more striking when Kelchen analyzed high-debt borrowers, those who owed $100,000 or more. Back in 2000, relatively small percentages of graduate students had that much debt — no more than 2 percent for any group. Those proportions grew across the board over time. But the growth was unusually significant among black borrowers. “In 2016, an astonishing 30 percent of African-American graduate students had at least $100,000 in debt,” Kelchen writes, “nearly three times the rate of white students.”

What accounts for this? The national study’s data are descriptive, and the government explicitly cautions against drawing causal inferences from it. Kelchen, for his part, suggests that the higher rates of borrowing among black graduate students is probably in part the result of their concentration in fields like education, which offer fewer assistantships. “Family resources,” he adds, “likely play a crucial role here.”

Family resources are the theme of the second new look at black student borrowing, a report on the Parent PLUS loan program from New America, a nonpartisan public-policy think tank. The report pulls no punches: It’s called “The Wealth Gap PLUS Debt: How Federal Loans Exacerbate Inequality for Black Families. “

Written by Rachel Fishman, deputy director for research in New America’s Education Policy Program, the report contrasts the way Parent PLUS — a federal loan program in which the parents of undergraduates can borrow to fund their children’s education — is used by black and white families.

The program, Fishman writes, was “created to give middle- and upper-income parents, who are predominantly white, access to fixed-rate lower-interest loans for expensive institutions.”

And that, she finds, is the way white families tend to use the program today. But not black families. “For white families,” she writes, “for the most part as income increases, so does the share of PLUS borrowers. For black families, it is exactly the opposite case.”

This pattern, of course, sets up the parents of black students to have to struggle to repay the loans, which have a higher interest rate and fewer protections than the loans that undergraduates themselves can take out.

“The types of colleges and universities where black and white students enroll does not explain these patterns away,” writes Fishman.

She points to the racial wealth gap as the primary factor — and argues that the loan program is making the broader problem worse.

Fishman closes out her report with a number of policy recommendations, both short term (add an “ability-to-pay” measure to the program) and long (end legacy admissions).

Beckie Supiano writes about teaching, learning, and the human interactions that shape them. Follow her on Twitter @becksup, or drop her a line at beckie.supiano@chronicle.com.