Math for the People

Section 9.7 the Intersectional Inequities of Student Debt

The average undergraduate student who takes out student loans has around \(\$25,000\) in debt by the end of their higher education, according to the U.S. Department of Education. However, this debt is not spread equitably by demographic category: \(30\%\) of non-Hispanic-identifying Black families carry an education loan, compared to \(20\%\) of non-Hispanic white families and \(14\%\) of Hispanic-identifying families [9.11.157].

Student debt is also not equally spread among age groups; Millennials (who were \(30\)-\(39\) years old in \(2021\)) total over \(\$500\) billion in student loan debt, compared to a little over \(\$350\) million of Gen Z (under \(30\) in \(2021\)), a little under \(\$350\) million held by those \(40\)-\(49\) years of age in \(2021\text{,}\) a bit under \(\$250\) million held by those \(50\)-\(59\) years old, and only around \(\$125\) million held by those \(60\) or older in \(2021\) [9.11.157].

Since Black families have been prevented from amassing generational wealth through systemic racism (in which laws favor one racial group over another), the legacy of slavery and Jim Crow, and mass incarceration, as well as continued implicit and explicit racism in public policy, housing (including the legacy of redlining, a policy which conitnued through \(1977\)), private banking and lending, access to education, and hiring practices, Black folks are both more likely to have to take on debt to attend college and less likely to attain wealth due to a college education [9.11.155].

In particular, a \(2013\) study found that the average white college-educated parent contributed \(\$73,500\) to their children's education, while Black parents contributed \(\$16,000\) on average. This is true despite the fact that, when controlling by household type and economic situation, Black parents contribute more on average than white parents.

Lower-income Black parents are disproportionately likely to take out Parent PLUS loans, which is a loan provided by the U.S. Department of Education to the parents of college students. Parent PLUS loans are unsubsidized and charge a loan fee (added to each loan payment) of \(4.228\%\) and an interest rate of \(7.54\%\) as of \(2022\) [9.11.173], adding a substantial financial burden to the parent borrower.

Under these circumstances, Black borrowers default on student loans five times more often that white borrowers [9.11.162]. Therefore, the disproportionate load of student debt on Black borrowers is both a symptom of, and exacerbates, the racial wealth gap in the U.S., or the difference in total assets and debts between Black and white Americans.

Defaulting on federal student loan debt leads to consequences such as bad credit ratings, a decrease in tax refunds, the garnishment of wages, and removal of security clearances which are at times a condition of employment [9.11.162]. The consequences for those who default include an inability to obtain loans to buy homes or cars, loss of wages, or loss of employment.

The data in this section come partly from a New York Times article by Ella Koeze and Karl Russell entitled ``The Toll of Student Debt in the U.S.'' An archived version of the article can be accessed here¹.

1. What are three things you notice about the graphs shown in the article? Explain what these particular things mean for students with debt.

2. What are three things you wonder about based on the article that are not answered in the article itself?

3. Do some research online and find reputable sources to answer your questions above.