A study just released by the Brookings Institution found that the differences in the amount of student loan debt for white and black borrowers increases after graduation. It also showed this could be due to the larger number of African-American students who enrolled in graduate programs. These higher enrollment rates can be linked to a much weaker job market in 2008 to help explain the disparity in repayment.
While experts agree that graduate school is worth the investment, it comes at a higher risk for African-American students due to both their higher enrollment in for-profit schools and because they tend to have lower graduation rates.
Judith Scott-Clayton is an associate professor at Columbia University. She wrote this study with Jing Li, a research assistant. The study is based on data from two national surveys on college graduates in 1993 and 2008.
The study calls for more data looking at outstanding student loan debt by race and claims that focusing on undergraduate borrowing alone only reveals part of the picture of possible racial differences. Advocacy groups have also called for the government to start keeping track of borrowers based on race, saying this will help inform researchers of the possible causes of racial differences.
This report also acknowledges that a lack of data could spread misinformation about racial disparities in student loan debt. Information such as the total amount borrowed, future income, and default rates can’t be broken down along racial lines. This information is not collected in the FAFSA so researchers don’t have insight into racial differences for those who borrow money and end up leaving college before they earn a degree.
This study showed that nearly half of African-American graduates owe more money on their loans four years after leaving college than they did immediately following graduation. This is twice the rate of white graduates. African-Americans also have a default rate of 7.6 percent, which is three times as much as white graduates. African-American graduates are also more likely to have the interest accumulate faster than they are able to pay off the balance of the loan.
According to the study, income-based repayment plans merely treat the symptoms rather than deal with the underlying problems. Scott-Clayton stated that the size of the debt four years after graduation shocking and that this indicates the system is not working the same for everyone.
The results of this study suggest that due to a weak job market in 2008, African-American graduates may have enrolled in graduate school at much higher rates than any other group, and more than a quarter enrolled in for-profit institutions.
Robert Kelchen is an assistant professor at Seton Hall University. He agreed that the study is illuminating as to the role graduate school plays in racial differences, but he has mixed feelings about requiring racial information on the FAFSA. He pointed out that asking for this kind of information could causes students to think their race would affect their eligibility.
Most experts agreed that more data is needed for a greater picture into what is going on and that it is possible that the disparities could be even greater than what this study revealed.