Race, racism, and student loans 

Dr. Dominique J. Baker*

Southern Methodist University 

Many students and families rely on borrowing to pay for college, though reliance on student 

loans is far from equally distributed among students and families. Overall, 55% of student 

borrowers hold less than $20,000 in student loan debt and it is rare for students to have six-figure 

loan balances.i However, there are significant differences in who borrows based on the effects of

structural racism, such as denial of wealth accrual and inadequate educational resources.

ii In fact, 

when we look at students who earned a bachelor’s degree in 2015-2016 (the most recent data 

available), we find that 64% of Black students held at least $20,000 in student debt.iii

Researchers and policy actors frequently view student loans as being irrelevant to Latino 

students since they borrow smaller cumulative amounts and have been described as “debt 

averse.”iv However, recent research and policy reports have shed light on the ways that Latino 

students are directly hindered by student loan burdens and are indirectly encouraged to enroll in 

community colleges even if a four-year institution might have been the better fit (in order to 

avoid accumulating student loans).v And, while often overlooked due to smaller population 

shares, American Indian, Alaska Native, Native Hawaiian, and other Pacific Islander students 

also borrow at above-average rates (76% and 90% for bachelor’s degree earners, respectively, 

compared to an overall average of 69%).vi Further, while women are more likely to borrow more 

than men,vii one study I conducted at the state level found that women of color—and Black 

women in particular—drive these findings.viii 

Compounding the inequities in students’ and families’ ability to afford college are structural and 

systemic barriers related to student loan repayment. When it comes to paying down student 

loans, there is evidence at both the federal and state levels that specific subgroups of students are 

more likely to struggle: students who do not complete their degree, students who attend for-profit 

institutions, and students who are Black.ix As a result, these students face a greater risk of 

defaulting on their student loans, having their credit adversely affected, having their wages 

garnished, and even losing Social Security benefits. According to a nationally representative 

sample of first-time enrolled college students, the data tell us that, on average, Black bachelor’s 

degree recipients are more likely to default on their student loans compared to White students 

who earn a bachelor’s degree (21% versus 4%, respectively). Even more startling, Black 

bachelor’s degree recipients default at a higher rate (21%) than White students who drop out of 

college (18%).x

 A recent report from the Center for American Progress shows that even with 

ready access to income-driven repayment plans, which close to one-third of Black bachelor’s 

degree earners use, Black individuals still default on their student loans at exceedingly high 

rates.xi

I want to dig into that point a bit more. If there were equitable returns to a college degree, all 

college graduates should be able to access a more economically prosperous life. But, Black 

college graduates actually struggle to repay their student loan debt more than White students who 

leave higher education with no degree. This is not due to some innate issue within Black people. 

* Email: djbaker@smu.edu. This document was prepared at the request of Dr. Rajeev Darolia, Advisor for economic 

and higher education policy analysis and data, for the 2021 Affordability and Student Loans Committee Meetings as 

part of the 2021-22 US Department of Education Negotiated Rulemaking for Higher Education.
Student loan burden disproportionately falls on these students due to centuries of structural 

forces pushing for this outcome.xii For example, structural racism has denied Black families the 

ability to build wealth to pay for college,xiii while also shaping residential and K-12 school 

experiencesxiv such that Black students are more likely to enroll in either systematically 

underfundedxv or outright predatory collegesxvi that will saddle them with high debt, little chance 

of earning a degree, or both. Then, those same students face a discriminatory labor market that 

pays them less than their peers for the same amount of education while also navigating other 

structures that impede their own ability to accrue wealth.xvii I provide a deeper dive into Black 

students as an example, but racism plays a role in how all racial/ethnic groups experience the 

student loan system. A true treatment of racism’s effects on student loan experiences would 

require more than the space allowed here. These realities combine to explain why it is necessary 

to think about the ways that race, racism, and student loans work together to create an untenable 

situation in the United States.

While I will refrain from providing explicit policy prescriptions, I will note that solutions to 

these issues need to: 1) take seriously the varied, systemic experiences students from different 

racial/ethnic groups have with the student loan system (much less the variation within groups), 2) 

address the disproportionate need to borrow to attend higher education, and 3) enable students to 

easily repay their student loans. The more requirements for paperwork and other methods of 

students proving that they “deserve” either an affordable education or help with repaying their 

student loans, the more barriers are created for borrowers, especially borrowers of color, due to 

the many interlocking systems of oppression in the United States.

i Ma, J., Pender, M., & Libassi, C. J. (2020). Trends in College Pricing and Student Aid 2020, New York: College 

Board.

ii Addo, F. R., Houle, J. N., & Simon, D. (2016). Young, Black, and (still) in the red: Parental wealth, race, and 

student loan debt. Race and Social Problems 8(1), 64–76.

Houle, J. N., Addo, F. R. (2019). Racial disparities in student debt and the reproduction of the fragile Black middle 

class. Sociology of Race and Ethnicity, 5(4), 562–577.

Seamster, L., & Charron-Chénier, R. (2017). Predatory inclusion and education debt: Rethinking the racial wealth 

gap. Social Currents, 4(3), 199-207.

Taliaferro, W., Taylor, T., & Wheatle, K. (2021). Changing the narrative on student borrowers of color. 

Washington, DC: Lumina Foundation. Retrieved from https://www.luminafoundation.org/wpcontent/uploads/2021/02/borrowers-of-color-2.pdf iii Baum, S., Ma, J., Pender, M. & Libassi, C. J. (2019). Trends in Student Aid 2019. New York: College Board.

iv Boatman, A., Evans, B. J., & Soliz, A. (2017). Understanding loan aversion in education: Evidence from high 

school seniors, community college students, and adults. Aera Open, 3(1), 2332858416683649.

Taliaferro, W., Taylor, T., & Wheatle, K. (2021). Changing the narrative on student borrowers of color. 

Washington, DC: Lumina Foundation. Retrieved from https://www.luminafoundation.org/wpcontent/uploads/2021/02/borrowers-of-color-2.pdf v Elengold, K. S., Dorrance, J., & Agans, R. (2020). Debt, doubt, and dreams: Understanding the Latino college 

completion gap. Retrieved from https://law.unc.edu/wp-content/uploads/2020/11/Debt-Doubt-and-DreamsReport.pdf

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vi Taylor, M., Turk, J. M., Chessman, H. M., & Espinosa, L. L. (2020). Race and ethnicity in higher education: 2020 

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vii AAUW. (2017). Deeper in debt: Women and student loans. Washington, DC: Author. Retrieved from 

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viii Baker, D. J. (2019). When Average Is Not Enough: A Case Study Examining the Variation in the Influences on 

Undergraduate Debt Burden. AERA Open, 5(2), 2332858419860153. ix Baker, D. J. (2019). When average is not enough: A case study examining the variation in the influences on 

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Houle, J. N., & Addo, F. R. (2018). Racial disparities in student debt and the reproduction of the fragile Black 

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Scott-Clayton, J. (2018). What accounts for gaps in student loan default, and what happens after. The Brookings 

Institution: Evidence Speaks Reports, 2(57). x Ibid.

xi Miller, B. (2019, Dec 2). The continued student loan crisis for Black borrowers. Center for American Progress. 

Retrieved from https://www.americanprogress.org/issues/educationpostsecondary/reports/2019/12/02/477929/continued-student-loan-crisis-black-borrowers/ xii Hamilton, D., & Darity Jr, W. A. (2017). The political economy of education, financial literacy, and the racial 

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