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Many American college graduates struggle with student loan debt, and with rising tuition costs, more and more people struggle to afford a college education. However, not all borrowers feel the pinch the same way.
Due to systemic factors like the racial wage gap, borrowers of color are most likely to face financial consequences stemming from their student debt. In fact, a recent Bankrate survey revealed that 64 percent of Black respondents and roughly 70 percent of Hispanic respondents have delayed important financial milestones due to their student loan debt, compared to less than half of white respondents.
Here’s a breakdown of America’s average student loan balances by race and the disparities between demographics.
Key debt statistics by race
- Black students take out the most student loan debt for a bachelor’s degree, followed by white students.
- Black borrowers carry a median student loan balance of $30,000.
- Ninety percent of Black students take out student loans to pay for college, compared to 66 percent of white students.
- Four years after graduating, Black students hold almost twice as much student debt as their white peers, largely due to differences in interest accrual and graduate school borrowing.
- After graduating from college, 17 percent of Black students are behind on their student loans, compared to 9 percent of white students.
- Out of women undergraduate borrowers, the average Black woman carries the most student debt, averaging $41,466.05 one year after graduation.
- Almost 71 percent of Black undergraduates are Pell Grant recipients, meaning they come from low-income households.
- Hispanic students are more averse to borrowing than other groups. In 2019, only 14.3 percent of Hispanics had student loan debt, compared to 20 percent of white and 30.2 percent of Black individuals.
- The median student loan balance of Hispanic borrowers is $17,600 — 41 percent less than Black borrowers and 23 percent less than white borrowers.
- It is estimated that 18 percent of Hispanic or Latino borrowers are behind on their student loan payments.
- Twelve years after starting college, the median Latino borrower owes about 83 percent of their original student loan balance. By contrast, white borrowers only owe 65 percent of their initial student loan balance during that same timeframe.
- Sixty-five percent of Latino undergraduate borrowers are Pell Grant recipients, according to the Department of Education. That means a majority of them come from low-income households.
- According to the Federal Reserve, the median net worth of Hispanic households is $36,100 — almost 81 percent less than that of white households.
- The average amount borrowed by American Indian and Alaska Native students is $33,700.
- Indigenous students rely on federal student loans, Pell Grants and Tribal scholarships more heavily to pay for college than any other form of financial aid.
- American Indian and Alaska Native borrowers owed 87 percent of their original student loan balance four years after graduation, while white borrowers owed 73 percent.
- Two in five students who identify as American Indian or Alaska Native default on their student loans.
- Student loan default rates are higher among Indigenous students due to widespread poverty in Indigenous communities. Of the country’s poorest counties, 40 percent are located on reservations.
- Native Americans have the lowest share of adults with bachelor’s degrees compared to all other racial and ethnic groups.
- According to an analysis by the Urban Institute, 72 percent of Asian students are Pell Grant recipients, meaning that most of them come from low-income families.
- When it comes to college financial aid, Asian-American students have the highest level of unmet need.
- The average amount borrowed by Asian students is $48,000.
- Asian borrowers repay their student loan debt faster than borrowers from any other race or ethnicity. Four years after earning their bachelor’s degrees, Asian graduates owed 63 percent of their initial student loan balance.
- Out of all female undergraduate borrowers, Asian women carry the lowest student loan balance, borrowing an average of $25,252 and owing $27,606.60 one year after graduation.
- Four years after obtaining their bachelor’s degree, white borrowers owed 73 percent of their initial student loan balance in 2020.
- Out of all undergraduate students from all races and ethnicities, white students have the lowest percentage of Pell Grant recipients at just 60 percent.
- Twenty percent of white households reported having student loan debt in 2019. By contrast, 30.2 of Black households and 14.3 percent of Hispanic households reported having student loan debt.
- Nine percent of white borrowers were behind on their student loan payments in 2021, compared to 17 percent of Black borrowers and 18 percent of Hispanic borrowers.
- White undergraduate students carry the second-highest student balance after Black undergraduates. White women borrow an average of $31,346 in student loans, while white men borrow an average of $29,862.
What is the breakdown of student loan debt by race?
|Race/ethnicity||Average total education loan debt||Median household net worth|
|Source: Federal Reserve|
Racial disparities in student debt
In a Bankrate survey from April 2022, borrowers of color — especially Hispanic borrowers — were most likely to report needing to delay a financial decision, like buying a house or saving for emergencies, due to their student debt. Unfortunately, this is only one impact among many that students of color face from their student loan debt.
Here are some other key findings from this survey:
- Sixty-eight percent of white respondents said they never took out student loans to pay for their education, versus 57 percent of Black respondents and 64 percent of Hispanic respondents.
- Almost half of white respondents said they haven’t delayed any important financial decisions due to their student loan debt, compared to 36 percent of Black respondents and 31 percent of Hispanic respondents.
- Twenty-four percent of Black respondents said they currently have student loan debt, compared to 13 percent of white respondents and 18 percent of Hispanic respondents.
- Only 42 percent of Black borrowers who took on student loan debt said college opened up career and income opportunities. By contrast, 54 percent of Hispanic and white borrowers believed they received greater career and income opportunities after graduating college.
- Twenty-three percent of Hispanic borrowers reported delaying purchasing or leasing a car due to their student loan debt, compared to 20 percent of Black borrowers and 21 percent of white borrowers.
According to research from the Brookings Institution, Black students saw the highest cumulative percentage change in median student debt and one of the smallest percentage changes in median income from 2009 to 2019, compared to white, Asian and Latino students.
Brookings also found that Black college graduates owe about $7,400 more than their white counterparts. However, a few years after graduation, this debt gap more than triples for Black borrowers.
Race and student loan payments
The outsized effect of student loan debt on marginalized communities can hurt monthly budgets after graduation. The Department of Education estimates that in 2016, Black bachelor’s degree graduates borrowed $53,200; white graduates borrowed $39,500; Asian graduates, $44,800; and Hispanic graduates, $38,000.
Here’s how their average monthly payments break down, four years later:
That monthly payment gap can be even wider for borrowers with private student loans, which often charge much higher interest rates.
Higher borrowing amounts could be one factor affecting default and delinquency rates.
Research by The Institute for College Access and Success shows that 12 percent of white students default on their student loans within 12 years, while nearly 38 percent of Black students’ loans will be in default status in the same period. The Institute on Assets and Social Policy adds that 20 years after starting a college education, the typical white borrower pays off almost 95 percent of their balance — but the typical Black borrower still owes 95 percent of their principal balance.
The bottom line
Student loan debt in America disproportionately impacts borrowers of color. Nearly every aspect of the lending process — from origination to repayment — impacts racial groups differently, with nonwhite borrowers shouldering longer repayment timelines and higher principal loan amounts.
Borrowers struggling with federal student loan payments can take advantage of federal benefits to lower their monthly payments, temporarily defer payments or apply for alternative repayment options. Those with private loans don’t have uniform relief options like federal loans; however, borrowers can ask their lender about hardship and payment relief options.