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Published: Mar 04, 2021 14 min read
Student Loan Racial Wealth Gap
Money; Getty Images

When Carrie Bovill dreams of a life without student debt, everything changes.

She could buy a house, change jobs, get married, have a baby. She could stop stressing so much about money and think about passing on some wealth to her future kids and grandkids.

But Bovill, who is Black, owes $123,327 to the federal government for two degrees she earned from two historically Black colleges. It’s a sum that, despite those dreams, the 29-year-old can’t ever see paying off.

“It makes me feel like I will never be able to do anything, honestly,” Bovill says, pausing. “But work. And pay.”

For borrowers like Bovill, who works as a community coordinator at Coastal Carolina University in South Carolina, paying off student debt feels like a life sentence. That is especially the case for many Black borrowers, who data show are disproportionately affected by student loans.

Last year, 30% of Black households held student debt, a higher share than among white or Latino households. And while the typical student debt levels of those households have remained relatively flat in recent years, the median debt among Black households in 2019 hit $30,000, up from $21,270 just three years earlier. Black borrowers are also far more likely to experience the most devastating outcome of student borrowing: defaults. Even high-earning Black borrowers, for example, default at a rate that's seven times that of high-earning white borrowers.

The disparate experiences of white and Black borrowers have gained fresh attention recently, as policymakers consider options to forgive some debt of the country's roughly 43 million student loan borrowers. Momentum for widespread forgiveness has been growing for years, but the pandemic recession and a Democrat in the White House have brought the conversation a new level of prominence.

Racial justice has become a leading issue in the latest push for debt cancellation. Because Black students have to rely more on student debt to pay for their college education and then take much longer to pay it down after school, researchers have found that student debt is actually exacerbating the existing racial wealth gap among younger generations.

“Eliminating student loan debt is not going to close that wealth gap, by no means are we arguing that,” says Fenaba Addo, an associate professor of public policy at the University of North Carolina, who's studied wealth and student debt among Black families.