When black students leave college with a bachelor’s degree, more of them also are leaving with debt greater than their white peers, according to a study released Monday by the College Board Advocacy and Policy Center.
Twenty-seven percent of black bachelor’s degree recipients in 2007-2008 borrowed $30,500 or more compared with 16 percent of whites, 14 percent of Hispanics/Latinos and 9 percent of Asians, the study said.
The borrowing gap between blacks and whites narrowed for dependent students whose family income was $100,000 or more. For example, 9 percent of dependent white students with family income of $100,000 or more had debt of at least $30,500, compared with 11 percent for blacks. Overall students in that range of family income are less likely to borrow than those from families with lower income, said report co-author Sandy Baum told BlackAmericaweb.com.
“High debt is more common among those families with income between $30,000 and $60,000,” Baum said.
The report does not offer specific reasons for the various ranges of debt, but seeks to put the information before the public for discussion so the issues can be addressed.
While blacks and whites may have the same income, there continues to be a gap in assets and wealth, which can impact financing college, Baum said.
Of the 66 percent of bachelor’s degree recipients who graduated with debt, 25 percent borrowed $35,500 or more, but the report said this doesn’t mean the graduates will have difficulty repaying their debt.
About 70 percent of the debt is through federal loans, the report said. A recent provision that limits payments to 15 percent of a person’s disposal income, means that graduates are not forced to regularly repay in huge amounts that do not take their finances in consideration, Baum said.
The report found that high debt is most common among students who graduated from for-profit institutions, where over half of 2007-08 bachelor’s degree recipients graduated with $30,500 or more in debt.
A larger percentage of students borrow from nonfederal sources to attend for-profit institutions, the report showed. Among for-profit bachelor’s degree recipients, 65 percent of borrowers had an average of $11,300 in nonfederal debt — in addition to their federal student loans.
In addition to federal Parents Loans for Undergraduate Students (PLUS), some parents take out private loans. Higher-income parents of high-debt bachelor’s degree recipients are more likely than those with incomes below $60,000 to take out PLUS Loans, and they borrow more when they do.
Often, it’s the non-federal debt that carries higher interest rates and no government protections to limit the amount of repayment, observers said.
“Some folks will sign the papers without looking at the fine print, and they end up with loans with high interest rates,” said Wil LaVeist, co-author of “8 Steps to Help Black Families Pay for College.”
“If you don’t have the earning power to repay the debt when you graduate, you’ll be looking at an upside down situation,” LaVeist told BlackAmericaweb.com.
He suggests that students and their families pay close attention to all of their documents when signing for college loans.
The high amount of college debt is another reason to stress the need for families to re-examine college choices and plans for paying the bill, LaVeist said.
“You may consider a community college for the first two years and complete your degree at a four-year college,” LaVeist said. Community colleges can be a good value.
Students also should take their studies in high school more seriously so they can score better on tests and maintain a strong grade point average to better compete for scholarships.
“I see too many kids focusing on being social,” he said. “What is important now is to get good grades in high school…There will be a college that will accept you and will be willing to pay for it.”