HUFFINGTON POST: College Debt Is Crippling Black Graduates’ Ability To Gain Wealth

Career College Central Summary:

  • Millions of Americans are plagued by student loans, an albatross hindering them from taking adult financial steps like buying a house or moving out of Mom and Dad’s basement. The Federal Reserve Bank of New York said Tuesday that outstanding student loan balances recently grew to $1.16 trillion in the U.S. But one group is disproportionately affected by student debt.
  • More than 40 percent of African-American families had student loan debt in 2013, compared with 28 percent of white families, according to an analysis by the Urban Institute, a Washington-based think tank studying issues of education, health policy and low-income families. African-American families also typically take on more student debt — $10,295 on average, compared with an average of $8,020 for white families.
  • The student debt disparity is just one factor adding to a yawning gap in wealth between black and white Americans.
  • One big reason black families are more likely to borrow for college is because they’re less likely to have access to traditional sources of wealth such as inheritances, or wealth-creating tools such as homeownership, according to the Urban Institute. Once black students graduate, the extra debt may prevent them from activities that build wealth — for example, buying a house or saving for retirement.
  • “Student loan debt can have ripple effects. It can delay when people buy their first home and when they begin to start saving seriously for their retirement,” said Signe-Mary McKernan, a senior fellow at the Urban Institute. “This disadvantage means that African-Americans are getting a late start in wealth accumulation.”
  • The Urban Institute analysis relies on data from the Federal Reserve Board of Governors' survey of consumer finances. One critique of the survey is that it underestimates total outstanding student loan debt.

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HUFFINGTON POST

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