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Black families, already burdened by intergenerational wealth disparities, are more likely than white families to rely on student debt and riskier forms of student debt to finance higher education. Additional risks faced by black students in paying off student debt stem from other disparities in the higher education system, including the targeting of for-profit colleges based on race. Even after these students leave school, the disparity persists. Due to lower family wealth and racial discrimination in the labor market, black students are more likely than white students to experience negative financial consequences after graduation, such as loan repayments, higher interest payments, and graduate school debt. This means that the disproportionate burden of student debt is widening the racial wealth gap, despite the fact that many black families currently rely on debt to obtain a college degree, resulting in higher wages. To fairly evaluate any proposal for higher education reform, we must understand that these double burdens—less capital and greater debt—are causing black students to fare worse than white students.

“student Loans And Social Mobility: Bridging The Economic Gap”

In 2019, Americans totaled $1.6 trillion in student debt, and the number of families burdened by 1 has risen rapidly: one in five U.S. households had student loan debt, compared to one in 10 in 1989.2 These huge numbers before the household, many policymakers began to propose tuition-free, debt-free college policy plans and even debt cancellation as a way to reinvest in higher education and American students. These proposals have sparked fierce debate over who will benefit from the effort and how the new resources will be allocated. However, these discussions often ignore the critical situation of who benefits and who suffers when the higher education system is financed by private debt rather than public investment.

New Report Shows Long Term Economic Impacts Of Holding Student Loans, Especially For First Generation Students And Students Of Color

To provide that context, this report compiles research on racial disparities in both student debt use and higher education outcomes, with a particular focus on disparities between white students and black students. To do so, we bring together two streams of research that are often at a standstill: research by experts on higher education access and achievement, and by economists, sociologists, and others who specialize in racial inequality, particularly the racial wealth gap. . These researchers draw on different data sets, tend to focus on different outcomes, and thus often define different problems, but both are critical to designing meaningful innovations. When we combine these studies, we get an increasingly clear picture: racial wealth gaps, high levels of student debt, and unequal access and outcomes to higher education for students of color, especially women of color, are often mutually reinforcing.

The report highlights the need for higher education policies to increase enrollment and college enrollment of students of color in order to realize the wage benefits of a college degree. It also underscores the need to consider the structural inequities and discrimination that shape the experiences of students of color in college, from college to access, and every step into the labor market after graduation or leaving school. post-secondary credentials.

In Part 1 of this report, we describe how historical policy decisions in higher education and the economy have contributed to these structural racial inequalities. In Section 2, we review key findings from each field of research on student debt by race. We then conclude by discussing what policy changes might help break the cycle linking student debt and racial wealth disparities. This report is followed by an appendix and an annotated bibliography that provides a more detailed look at datasets used by researchers in different fields.

In policy-making, we treat current systemic inequalities as natural and inevitable, rather than the result of deliberate policy choices. However, the American higher education system is replete with examples of policies that directly exacerbate or create racial inequality. It includes:

Understanding Social Mobility

These policy choices, along with similar structures throughout the American economy, have a powerful impact today on the structures of racism embedded in the higher education system:

A relatively recent policy choice to require students to pursue debt-financed higher education has disproportionately affected students of color. By first creating a system of racial segregation, then removing the system’s most blatant racism, and finally turning student debt into a tool to expand access rather than a public investment, policymakers have created inequality and discrimination. , created a system that created structural barriers. It helps determine the cost and magnitude of the ultimate financial benefits of college for blacks and browns across the economy.

The higher education system, a primary vehicle for economic mobility, is not equally accessible to black and white families. Such inequality also manifests itself in the wider education system and the economy. Every major economic and social resource in the United States, from housing to banking to the K-12 education system, has developed within the context of racial politics. All have inequities that limit economic mobility and the ability of black families to create wealth.3

Beginning in kindergarten, most students move into deeply segregated systems.4 Following Brown v. Board of Education, school integration efforts took a turn in the 1980s when courts allowed state legislatures to dismantle the structures that had been put in place to segregate schools. . As a result, schools were re-divided in many regions of the country. By 1989, 83 percent of black students attended majority-minority schools.5 Segregated schools led to severe under-resources; Predominantly white districts receive nearly $23 billion more in funding than non-white districts, despite serving the same number of students, and the gap between white and black graduation rates remains the same.6

Bold Action Required: How To More Effectively Support Students From Low Income Backgrounds

Racial policy choices that underlie the higher education system began with early federal policies aimed at developing the public college and university system. Early federal investments in higher education, such as the establishment of land-grant colleges under the Morrill Act in the 19th century, provided federal funding and land to states with formally segregated higher education systems. Even after the passage of the Civil Rights Act, federal education dollars continued to fund states with segregated systems. In the late 1960s, 19 states still had desegregated universities and colleges.7 It wasn’t until the 1970s that courts began forcing states to desegregate their university systems.8

Prior to the court-ordered desegregation of the public university system, major federal investments in the higher education system, such as the GI Bill and the Higher Education Act of 1965, had disparate effects on black and white students. Ira Katznelson, a professor of political science at Columbia, points out that in order to win the support of southern members of Congress, the GI Bill gave state and local governments considerable autonomy in implementing the program. State officials then made choices that prevented eligible Black GIs from receiving all kinds of educational benefits: Segregated colleges refused to admit Black GIs in numbers that included all those eligible; career placement officers steered Black GIs away from more lucrative job training programs and toward traditionally Black occupations; and GI Bill administrators in some Southern states refused to allow many black colleges and vocational schools to receive GI Bill benefits.9 In 1947, more than 20,000 black veterans reported that they could not find a place in higher education. Because of the unjust administration of the GI Bill, Black organizations lacked the facilities and funding to meet the demand. Funding disparities for minority-serving organizations persist.

Differences in state funding between two- and four-year public institutions and between flagship and satellite campuses are common throughout the higher education system. As a result of disparities in the K-12 system, admissions discrimination, and other factors, it is not surprising that students of color are more likely than white students to attend public institutions with lower per-student costs and less funding. universities (HBCUs). One study found that in 2014, four traditionally white organizations received more federal, state, and local contracts and grants than the 89 four-year LLPs combined.12 Even among public institutions, public LLPs have little non-governmental resources: 54 percent of public, four-year HEIs derive their income from government sources, while their predominantly white population receives 38 percent of their annual income from government sources alone.13 Also, private HEIs have fewer endowments and resources because graduates have less wealth. .14 ​​However, HBCUs award about 17 percent of all bachelor’s degrees awarded to black students and a quarter of all STEM degrees awarded to black students.15

For people of color, many families saw their net worth nearly halve during the recession, and we added higher prices.

The Long Term Consequences Of Student Loans

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