Black-White Disparity in Student Loan Debt More than Triples after Graduation

By Rachel Fenton

Brookings recently released a report by economist Judith Scott-Clayton and researcher Jing Li that provides new evidence showing the racial gap in total student debt held by black and white college graduates is larger than shown by previous studies.

Among the report’s key findings:

  • Previous studies have shown that black college graduates hold about $7,400 more in student loan debt at graduation than white graduates. Four years following college graduation, the black-white debt gap is even larger: Black college graduates have almost $25,000 more in student loan debt, compared to white college graduates ($52,726 versus $28,006).
  • About 30% (or $7,375) of this $25,000 black-white debt gap can be explained by differences in undergraduate borrowing. Black college graduates borrow $23,420 versus $16,046 borrowed by white college graduates on average.
  • Differences in graduate school borrowing account for about 45% (or $11,094) of the black-white debt gap.
    • Forty percent of black college graduates have graduate school debt, compared to 22% of white college graduates.
    • Compared to white college graduates, a disproportionally high number of black college graduates enroll in graduate school (47% versus 38%).
    • Twenty-eight percent of black graduate students enrolled in for-profit graduate schools, compared to 9% of white graduate students.
  • About 25% (or $6,252) of the black-white debt gap results from differences in repayment and interest accrual.
    • Four years after graduating from college, almost half (48%) of black graduates owe more on their federal undergraduate student loans than they did at graduation, compared to 17% of white college graduates.
    • Black college graduates are three times more likely to default within four years of graduation than white college graduates (7.6% versus 2.4%).
  • The black-white debt gap cannot be explained by racial differences in parental education or income. For example, the black-white debt gap is significantly larger than the debt gap by parental education or by those who received or did not receive Pell grants.
  • Given the black-white debt gap, the authors suggest including race in federal databases to allow for research, conducting research on the value of graduate education and addressing the underlying causes of racial debt disparities.