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Media Deep Dive: The State of the Student Debt Crisis for Black Women

Deep Dive: The State of the Student Debt Crisis for Black Women

In honor of Juneteenth, SBPC released the following Deep Dive summarizing the groundbreaking research by groups such as the Education Trust, NAACP, and many others who have meticulously documented the unique experience that Black women face in the student loan and higher education systems. The work highlighted in this Deep Dive has shed light on the ways that our higher education financing system is detrimental to Black women’s overall well-being and ability to build wealth. As the Biden Administration is working to write new rules to deliver debt relief, and as the student loan system struggles to return tens of millions of borrowers to repayment—it is essential to elevate the ways that Black women uniquely experience the student debt crisis.

Author: Khandice Lofton, June 19, 2024.

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Introduction

Juneteenth commemorates the day when, more than two years after the implementation of the Emancipation Proclamation, over 250,000 slaves in Texas were notified that they were freed.1 As we celebrate the liberation that Juneteenth represents, it is important to remember that the fight to end oppression is long from over for Black people, especially Black women. The conversation surrounding the struggles Black women face across our economy and democracy must continue to be uplifted and considered when solutions are discussed. This extends specifically to the ways that Black women must navigate a broken higher education and student loan system. 

For decades, student debt has inhibited borrowers from building wealth, buying a home, starting a family, building a small business, or even saving for retirement.2 While the burden and specter of debt impacts tens of millions of borrowers, student debt has a unique and profound impact on Black women. For decades, Black women have obtained undergraduate and graduate degrees at the highest rates,3 yet face relentless discrimination in the labor4 and housing markets5. As a result, Black women hold a disproportionate share of the $1.7 trillion in student loan debt, have higher average balances than any other demographic6, and are the demographic most likely to see debt spiral out of control.7 

The experience of Black women, in particular Black women with debt, has been elevated to the forefront of policy and political conversations over the past few years. The resurgent movement for racial justice has centered Black women in many economic policy conversations, and the commitment by the Biden Administration to provide relief to millions of borrowers has led to greater research, advocacy, and attention on the fundamental flaws in our student loan and higher education system. 

The changes ushered in by the Biden Administration to address many of the broken features of our student loan system, including cancelling debt for millions of struggling borrowers, are ensuring that more borrowers will be able to plan for their futures and access much-needed debt relief. Several proposals and programs, such as cancelling debt for borrowers who are eligible, but not enrolled, in Income-Driven Repayment (IDR) plans or in Public Service Loan Forgiveness (PSLF), and proposing cancellation for those who are suffering from hardship while trying to repay their student loans, provide crucial avenues for Black women who are often stuck with debt for decades due to structural forces beyond their control.

Access to existing debt relief programs is also crucial for Black women, who are often uninformed or misinformed by servicers, are not prioritized in outreach efforts, and do not receive the cancellation they deserve after reaching the qualifying payment threshold. These developments are a great start, but one thing remains clear: there are still many systemic changes needed to put an end to this crisis.

Student Debt Perpetuates the Racial Wealth Gap ⬆(Back to top)

The student debt crisis impacts Black Americans more acutely because of the racial wealth gap that forces Black student loan borrowers to take on more student loan debt to access higher education.8 Black families are less likely to be able to leverage wealth in order to avoid borrowing or to pay off debt quickly.

Consider the 41 percent of white college-educated families who receive an inheritance, compared to only 13 percent of Black families, which significantly lowers the stress of figuring out how to pay for an education for white borrowers, but causes more strain for Black borrowers and their families.9 This includes the fact that the typical white family has $100 in wealth for every $15 held by the typical Black family10 and that 20 percent of all Black households have zero or negative net worth.11 Black students are often targeted by high-cost, low-quality for-profit colleges that cluster in communities of color and provide dubious value, which only increases debt balances with little payoff in the job market.12

The vast wealth disparities between Black and white households result in Black student loan borrowers shouldering larger burdens so that they can have the slightest chance at building wealth. For undergraduate education, Black students, on average, have to take out approximately $39,500 of undergraduate student debt, compared to $29,900 for white borrowers.13 This creates a double bind: higher debt for a credential, with the added risk of not seeing a return on their investment due to the barriers that continue to permeate American society and hinder progression for Black women due to systemic racism that exists within the housing, labor, healthcare, and every other sector of the American economy.14 Thus, the racial wealth gap often leaves Black borrowers in a deeper hole than white borrowers, and it makes it more difficult to build generational wealth and reap the rewards of higher education when you cannot actually obtain them. 

Furthering the intergenerational nature of student debt, Black student loan borrowers are disproportionately more likely to hold Parent PLUS Loans.15 Parent PLUS Loans are federal student loans made to parents to pay for their children’s undergraduate education.16 These loans, intended for high-income families who could not afford to pay for college up front and had caps on the amount one could borrow, are now used by more parents with low incomes and wealth to pay for the full price of tuition and other college costs.17 Because, for many families, financial aid no longer covers nearly enough for college, even if a borrower’s Expected Family Contribution (EFC) is zero, a lot of Black borrowers and parents must take on this debt to pay for an education so that they can have the slightest chance at building a better life. 

These loans are exhausting for Black women to take on. For example, a single Black mother of three had to use these loans to fund her and her daughters’ secondary education, just to be crushed with over $300,000 in debt years later.18 This is after making years of consistent payments on the loans. Because many Black families, particularly Black women, lack the generational wealth that Parent PLUS loans were created to aid in paying for college, there is a tremendous impact that only few studies have dared to discuss.19 Parent PLUS borrowers are often locked out of programs that grant relief, or must jump through complicated loopholes in order to access many programs within the student loan safety net.20

Black Women with Student Loan Debt Face Tremendous Burdens ⬆

As the student debt crisis has become better understood as a racial justice issue and civil rights crisis, researchers have increasingly sought to explore the specific effects of student debt on Black women. Black women have the highest average student loan balances and are more likely to experience greater runaway loan balances.21 Therefore, in order for policymakers to truly improve the higher education financing system, they must incorporate Black women’s experiences. 

Due to the intersectionality of being Black and a woman, among other marginalized identities, Black women often face the perpetual discrimination buried in our nation’s deep-seated history of exclusion.22 Because of this compounding of marginalized identities, Black women often have to acquire more education, which means more student loan debt, due to the lack of generational wealth, to help pay for their degrees.23 Black women are more likely to enroll in for-profit graduate schools, which typically come with six-figure debt and fewer returns in the job market.24 In general, Black women often face discrimination in the job market, which causes them to find employment in places that have historically hired people of color, such as the public sector, which can lead to underpayment, overrepresentation in low-wage jobs, and fewer opportunities for management positions within their career.25 

The Education Trust, in particular, has published significant research demonstrating the ways that Black women are too often trapped in a systemic cycle of indebtedness.26 This cycle prevents Black women from building the generational wealth that higher education is supposed to unlock for future generations. As its research documents, Black women are more likely to take on higher education debt and borrow in larger amounts.27 Black women hold slightly higher debt burdens than Black men and significantly higher debt burdens when compared to white women:

  • Black women have an average of $38,800 in federal undergraduate loans, and that average rises to $58,252 for those who attended graduate school.28
  • Black men have an average of $35,997 for undergraduate loans, which rises to $49,416 for those who obtain graduate loans.29 
  • White women have an average of $27,068 for undergraduate loans, which rises to $29,323 for those with graduate loans.30

Black women with bachelor’s degrees also experience substantial wage gaps upon graduating:

  • Black women with bachelor’s degrees earn a median salary of $60,681.31
  • White men with bachelor’s degrees earn a median salary of $91,805.32 
  • Black men with bachelor’s degrees earn a median salary of $75,329.33 
  • White women with bachelor’s degrees earn a median salary of $67,324.34

The substantial wage gap paired with the higher debt burden further amplifies the effects of student debt on Black women specifically, keeping them in the continuous intergenerational curse: a cycle of higher debt, a subsequent harder time repaying debt, and extreme difficulty building generational wealth. Thus, the wage gap also makes it even more difficult to shrink the wealth gap, which makes paying student loan debt nearly impossible for more generations.

Black Women Face Additional Hurdles in Student Loan Repayment ⬆

When Black women reach the point of repaying their loans, they face compounding struggles with navigating a broken student loan system without any guidance. Because financial aid has not kept up with the skyrocketing cost of college, it leads Black women, who have the least amount of financial resources, to take out more loans that are unaffordable to repay.35 Yet, despite the fact that these loans were borrowed to pursue an education with the hopes of being able to make a living, Black women face challenges beyond simply higher balances. 

As discussed above, when Black women have to navigate a fluctuating economy with increasing inflation, without a high-paying salary, they are forced to struggle with repayment which can lead to higher default rates.36 More education alone is not enough: In fact, Black women with a bachelor’s degree typically earn less than white men who have only attended some college.37 Black women are overrepresented among low-wage workers and were particularly vulnerable to job loss during the COVID-19 pandemic.38 Being underpaid is not just a few cents lost; it can compound into hundreds of thousands of dollars lost during a Black woman’s lifetime. Over the course of a 40-year career, Black women are likely to lose an estimated $964,400 because of the race and gender wage gaps.39 This underpayment contributes to the conflict that Black women face when they have to begin repayment of their student loans. Black women struggle to pay for expenses like rent and food more than any other group, and this added expense continues to pile on the hardship that Black women face in repaying their loans.40

Another added cost is raising children, considering 40 percent of Black women in college are mothers.41 The struggle to afford basic needs both drives higher student debt, since a high proportion of debt is borrowed for non-tuition expenses like housing or childcare, and also contributes to the burden of repayment. In other words, the cost of raising a child while in school is immense, but the burden of raising a child while also repaying student loan debt is an even larger anchor for Black women’s economic mobility and stability.

About 57 percent of Black women graduates report financial difficulties while repaying student loans, based on pre-pandemic numbers, and this does not appear to be decreasing. These intersecting identities inhibit Black women from achieving goals that are more easily attainable by other races and genders.42

Further, Black women suffer from poor student loan servicing and deceptive practices by the student loan industry.43 Loan servicers are responsible for ensuring borrowers can access repayment plans, loan cancellation programs, and resources to avoid outcomes like delinquency and default. Yet decades of misconduct and servicer breakdowns have steered borrowers, including Black and Latino/a borrowers, away from affordable repayment plans and options to mitigate default, contributing even further to high rates of distress.44

While education is supposed to elevate people, especially people of color, into a better, more financially stable life, it has become a nightmare for millions of borrowers, especially for Black women who find themselves trapped in a decades-long cycle of debt that extends across generations.45 It’s even more of a nightmare for Black women who are impacted by the flawed criminal justice system that creates another layer of struggle when entering repayment, due to the inability to communicate with servicers while incarcerated and especially because it is even harder to obtain a job and housing upon reentering society.46

The lack of generational wealth among Black women also makes college, and post-graduation life, even more unaffordable than that of white women and Black men in the same position. Twelve years after starting college, Black women owe 13 percent more than they initially borrowed compared to white men, who by then, have paid off 44 percent of their debt.47 These costs continue to make the “American Dream” not only unattainable but unimaginable in the economic society that we live in today. This burden on Black women is tremendous, which makes wanting an education seem more like a privilege than the right it should be.

When the price of obtaining an education weighs on borrowers for decades, it only widens the racial wealth gap, making it harder to build generational wealth because by the time one graduates from college, they are already behind. This is too often the experience of Black women with debt, and it should be front and center when discussing ways to reform the higher education financing system, how to improve funding for institutions Black women, and other marginalized populations, attend; how to structure and design student loan cancellation; and how to rebuild our student loan safety net.

Recommendations: Centering Black Women’s Experience in the Student Debt Policy Conversation ⬆

A multi-faceted policy approach is necessary to address the deeply complex set of issues that compound the burdens facing Black women with student debt. In recent months, ED has taken steps to improve the student loan system, including introducing the new Saving on a Valuable Education (SAVE) plan to help lower borrowers’ payments and significantly reduce runaway interest48—a particularly acute problem for Black women. 

Other improvements have included updating the Public Service Loan Forgiveness (PSLF) Program so that more borrowers are able to enroll in the program and efficiently receive credit toward cancellation, cancelling debt for borrowers who were defrauded by institutions, and providing cancellation through Income-Driven Repayment (IDR) for borrowers who have been in repayment for decades. Given the ways that Black women experience higher education—susceptible to predatory institutions and lenders, forced to repay for decades due to persistent wage and wealth gaps—these program fixes, which have resulted in over $150 billion in cancelled debt, are beginning to rectify the past injustices that have been felt most acutely by Black borrowers, and Black women specifically.

As ED continues to work to make systemic changes, it must remember to center Black women’s struggles with the higher education system to ensure that the changes are holistic and inclusive:

  • ED must continue to make an effort to broadly cancel debt for borrowers, especially those who are experiencing hardship such as Black women struggling with repayment.49 ED should ensure that a portion of the borrower’s principal loan balance is forgiven as well as provide automatic cancellation for as many borrowers as possible, not just the ones who are likely to default.
  • ED must ensure that Parent PLUS borrowers have access to all relief programs. In particular, it should provide Parent PLUS borrowers who have consolidated, many of whom are Black women, access to all IDR plans.
  • ED must remember borrowers who owe on Federal Family Education Loans (FFEL), include them in any upcoming rulemaking proposals, and ensure they access relief programs.
  • It is also essential that Congress, ED, and states work together to rebuild long-term state investment in public higher education — especially public HBCUs, Minority Serving Institutions (MSIs), and community colleges — and ensure that all students, particularly those who have been systemically marginalized, have access to free, and debt-free, pathways toward a degree.
  • ED must also include current students and younger borrowers, many of whom are Black women, in any discussion surrounding higher education reform so that they have access to debt relief programs that function efficiently and completely.

In addition to creating solutions centered around Black women borrowers, ED must also tailor specific relief for the justice-impacted borrowers, many of whom are also women and people of color, who are often lost in the discussion of the student loan debt crisis.50

Conclusion ⬆

The student loan debt machine is broken, and borrowers across all demographics are suffering at the hands of a flawed system. However, Black women bear the brunt of such damage in more ways than most others because of systemic discrimination and racism. Some solutions have been offered, yet no movement has been made toward minimizing it nor has a pathway been created for Black women to be relieved of the burden in a way that would increase their earning potential to build generational wealth. In order to end the student debt crisis, Black women must be at the forefront of the solutions.

Reading Recommendations: ⬆

Khandice Lofton is Counsel at the Student Borrower Protection Center.

Endnotes: ⬆

  1.  https://nmaahc.si.edu/explore/stories/historical-legacy-juneteenth ↩︎
  2. https://www.bankrate.com/loans/student-loans/financial-milestone-survey/; https:// finance. yahoo.com/news/student-debt-killing-entrepreneurship-133719117.html; https://www.demographic-research.org/volumes/vol30/69/ ↩︎
  3. https://www.politico.com/newsletters/women-rule/2023/06/09/black-women-and-the-student-loan-burden-00101239 ↩︎
  4. https://nationalpartnership.org/black-women-still-face-inequities-todays-strong-labor-market-jobs-day-february-2024/ ↩︎
  5.  https://uncpress.org/book/9781469663883/race-for-profit/ ↩︎
  6. https://www.forbes.com/sites/korihale/2023/07/11/how-the-16-trillion-student-loan-debt-disproportionate-weighs-on-black-women/?sh=5b533c254bf8; https://www.nerdwallet.com/article/loans/student-loans/supreme-courts-student-loan-decision-will-impact-black-women-most ↩︎
  7. https://protectborrowers.org/wp-content/uploads/2021/09/SBPC_Driving_Runaway_Debt.pdf ↩︎
  8. https://www.naacpldf.org/student-loans-racial-wealth-gap/ ↩︎
  9. https://www.demos.org/research/debt-to-society ↩︎
  10.  https://www.brookings.edu/articles/black-wealth-is-increasing-but-so-is-the-racial-wealth-gap/ ↩︎
  11. https://www.stlouisfed.org/on-the-economy/2021/january/wealth-gaps-white-black-hispanic-families-2019; https://equitablegrowth.org/encouraging-banks-to-serve-the-credit-needs-of-everyone/fig2-31/ ↩︎
  12. https://protectborrowers.org/for-profit-mapping/ ↩︎
  13. https://www.naacpldf.org/student-loans-racial-wealth-gap/; https://fivethirtyeight.com/features/canceling-student-debt-could-help-close-the-wealth-gap-between-white-and-black-americans/ ↩︎
  14. https://www.demos.org/research/debt-to-society ↩︎
  15. https://edtrust.org/wp-content/uploads/2014/09/ParentPLUS_Brief_V6.pdf ↩︎
  16. https://studentaid.gov/understand-aid/types/loans/plus/parent ↩︎
  17. https://edtrust.org/wp-content/uploads/2014/09/ParentPLUS_Brief_V6.pdf ↩︎
  18. https://wordinblack.com/2023/08/thanks-to-parent-plus-loans-this-mom-owes-student-loan-debt/ ↩︎
  19. https://tcf.org/content/report/parent-plus-borrowers-the-hidden-casualties-of-the-student-debt-crisis/ ↩︎
  20. https://www.forbes.com/advisor/student-loans/pros-and-cons-parent-plus-loan/; https://protectborrowers.org/double-consolidation-for-a-limited-time-a-way-for-parent-plus-borrowers-to-get-on-the-save-plan/; https://www.usatoday.com/story/news/education/2023/12/03/parents-struggle-student-loan-debt/71680559007/ ↩︎
  21. https://protectborrowers.org/wp-content/uploads/2021/09/SBPC_Driving_Runaway_Debt.pdf ↩︎
  22. https://chicagounbound.uchicago.edu/cgi/viewcontent.cgi?article=1052&context=uclf ↩︎
  23. https://edtrust.org/resource/how-black-women-experience-student-debt/ ↩︎
  24. https://www.brookings.edu/articles/black-white-disparity-in-student-loan-debt-more-than-triples-after-graduation/ ↩︎
  25. https://www.shrm.org/topics-tools/news/women-of-color-in-federal-jobs-less-pay-fewer-promotions ↩︎
  26. https://edtrust.org/resource/how-black-women-experience-student-debt/ ↩︎
  27. https://edtrust.org/resource/how-black-women-experience-student-debt/ ↩︎
  28. https://edtrust.org/resource/how-black-women-experience-student-debt/ ↩︎
  29. https://edtrust.org/resource/how-black-women-experience-student-debt/ ↩︎
  30. https://edtrust.org/resource/how-black-women-experience-student-debt/ ↩︎
  31. https://edtrust.org/resource/how-black-women-experience-student-debt/ ↩︎
  32. https://edtrust.org/resource/how-black-women-experience-student-debt/ ↩︎
  33. https://edtrust.org/resource/how-black-women-experience-student-debt/ ↩︎
  34. https://edtrust.org/resource/how-black-women-experience-student-debt/ ↩︎
  35. https://edtrust.org/resource/how-black-women-experience-student-debt/ ↩︎
  36. https://www.americanprogress.org/article/women-of-color-and-the-wage-gap/ ↩︎
  37. https://nwlc.org/resource/black-womens-equal-pay-day-factsheet ↩︎
  38. https://www.aauw.org/resources/article/black-women-and-the-pay-gap/; https://www.brookings.edu/articles/the-black-white-wealth-gap-left-black-households-more-vulnerable/; https://nwlc.org/resource/black-womens-equal-pay-day-factsheet/ ↩︎
  39. https://www.americanprogress.org/article/women-of-color-and-the-wage-gap/ ↩︎
  40. https://edtrust.org/resource/how-black-women-experience-student-debt/; https://www.aauw.org/resources/research/deeper-in-debt/ ↩︎
  41. https://edtrust.org/resource/how-black-women-experience-student-debt/ ↩︎
  42. https://edtrust.org/resource/how-black-women-experience-student-debt/; https://www.goodmorningamerica.com/living/story/amid-staggering-student-loan-debt-black-women-face-10168386; https://www.forbes.com/sites/korihale/2023/07/11/how-the-16-trillion-student-loan-debt-disproportionate-weighs-on-black-women/?sh=5b533c254bf8 ↩︎
  43. https://www.responsiblelending.org/sites/default/files/nodes/files/research-publication/crl-quicksand-student-debt-crisis-jul2019.pdf; https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3712516 ↩︎
  44. https://protectborrowers.org/wp-content/uploads/2023/10/Delivering-Distress-Report.pdf ↩︎
  45. https://edtrust.org/resource/how-black-women-experience-student-debt/ ↩︎
  46. ttps://protectborrowers.org/wp-content/uploads/2022/08/Collection-at-All-Costs_Final.pdf; https://protectborrowers.org/wp-content/uploads/2022/08/Collection-at-All-Costs_Final.pdf ↩︎
  47. https://www.goodmorningamerica.com/living/story/amid-staggering-student-loan-debt-black-women-face-101683866 ↩︎
  48. https://studentaid.gov/announcements-events/save-plan ↩︎
  49.  https://www.demos.org/research/debt-to-society ↩︎
  50. https://protectborrowers.org/wp-content/uploads/2022/07/Collection-at-All-Costs_Final.pdf; https://protectborrowers.org/wp-content/uploads/2022/08/Collection-at-All-Costs_Final.pdf ↩︎

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