Reasons Why Student Loans Hit The Black Borrowers Harder

21.02.22 10:36 PM Comment(s)

Since 1976, the month of February has been dedicated to celebrating the history and accomplishments of African-Americans. Black History Month provides an opportunity to acknowledge African-Americans for their contributions to American society and appreciate how they have overcome great adversities to become integral members of the American community at large.

As we celebrate their pivotal role in US history, recognizing their fight against slavery and the triumphs of the Civil Rights Movement, we must also recognize that African-Americans still struggle with racism, inequality, and other injustices. Focusing on student debt, for instance, statistics show that, Black and African American "student borrowers are likely to struggle financially due to student loan debt" and owe an average of $25,000 more in student loan debt than white college graduates.

Let's consider some of the key issues contributing to this disparity:

Higher Interest Rates

Owing to wealth inequality, Black American students are considered as "high credit risk" by lenders which amounts to a higher interest rate as compared to their White American counterparts.

College Choices

Evidence suggests that Black Americans are more likely to attend for-profit and private colleges especially if they come from low-income backgrounds. Many fall prey to easier enrollment guidelines and faster degree completion seem attractive without recognizing the pitfalls of higher cost and suspect career outcomes of these colleges. Since private and for-profit colleges are not accredited, cheaper federal student loans are not available forcing them to take on expensive private student loan debt.

Lack of Guidance 

Black students tend to be the first in their families to attend college. Due to the lack of family guidance, navigating the uncharted college landscape is a challenge for Black students. They are unaware of the hidden costs such as housing, meals, study materials, technology costs, etc. They are also unfamiliar with how to access financial aid and are likely to miss out on these benefits. Moreover, due to limited family support for student loan repayment, they tend to struggle more than their White American counterparts.

Pay Discrimination

After college, despite similar qualifications, Black workers encounter "pay discrimination." The resulting income inequities and the aforementioned higher student loan balances, make repayments even more difficult for Black student loan borrowers.

The sky-rocketing cost of a college education is a problem shared by all students.  However, for Black American students, the burden of education is compounded by the disproportionate student loan debt that they tend to carry.

Going to college is important because education is a known path towards achieving financial security but there has to be a better way to deal with student loan debt.  Defynance offers student loan refinancing with income share agreements that pay off student debt and eliminate compounding interest.  Defynance does not consider race, gender, and other biasing factors in its approval process so everyone, including Black Americans, has a fair opportunity to overcome their student debt burden.  You can learn more at