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Wall Street Journal Covers CCRC Study on Racial Disparities in College Debt

Judith Scott-Clayton, Associate Professor of Economics and Education
Judith Scott-Clayton, Associate Professor of Economics and Education
TC's Community College Research Center published a study which shows that, four years after graduation, black college graduates owe nearly twice as much student debt as white graduates—and they are three times more likely to default. The findings, contained in a new paper by Judith Scott-Clayton, associate professor of economics and education and senior research associate at CCRC; and Jing Li, a graduate student in economics and education at Teachers College, suggest the past decade’s surge in student debt is affecting blacks far more than any other racial group.

In a story about the study in The Wall Street JournalScott-Clayton is quoted as saying she was " 'shocked when she saw these numbers.' " The story points out that "other researchers have documented racial disparities in student debt upon graduation, but this is the first time research has shown gaps postgraduation."

In an executive summary of the report, which was written for The Brookings Institution, Scott-Clayton and Li write that "the moment they earn their bachelor’s degrees, black college graduates owe $7,400 more on average than their white peers ($23,400 versus $16,000, including non-borrowers in the averages).

"But over the next few years, the black-white debt gap more than triples to a whopping $25,000. Differences in interest accrual and graduate school borrowing lead to black graduates holding nearly $53,000 in student loan debt four years after graduation—almost twice as much as their white counterparts."

Scott-Clayton and Li continue: "While previous work has documented racial disparities in student borrowing, delinquencies, and defaults, in this report we provide new evidence that racial gaps in total debt are far larger than even recent reports have recognized, far larger now than in the past, and correlated with troubling trends in the economy and in the for-profit sector."

In a policy discussion at the conclusion of the paper, Scott-Clayton and Li write that "[n]ew repayment options such as the Revised Pay-As-You-Earn (REPAYE) plan may alleviate the worst consequences of racial debt disparities, while failing to address underlying causes" such as "systemic racial inequality resulting from historical discrimination (leading to low parental wealth), ongoing racial bias in the labor market, or predatory recruitment by for-profit institutions.

"Federal financial aid policy alone cannot solve these problems—but neither can it ignore the challenges facing students of color who disproportionately bear the burden of student debt."

To read the subscription-based Wall Street Journal story, click here or read it here [PDF of story].

Published Friday, Oct 21, 2016

Judith Scott-Clayton, Associate Professor of Economics and Education
Judith Scott-Clayton, Associate Professor of Economics and Education
TC's Community College Research Center published a study which shows that, four years after graduation, black college graduates owe nearly twice as much student debt as white graduates—and they are three times more likely to default. The findings, contained in a new paper by Judith Scott-Clayton, associate professor of economics and education and senior research associate at CCRC; and Jing Li, a graduate student in economics and education at Teachers College, suggest the past decade’s surge in student debt is affecting blacks far more than any other racial group.

In a story about the study in The Wall Street JournalScott-Clayton is quoted as saying she was " 'shocked when she saw these numbers.' " The story points out that "other researchers have documented racial disparities in student debt upon graduation, but this is the first time research has shown gaps postgraduation."

In an executive summary of the report, which was written for The Brookings Institution, Scott-Clayton and Li write that "the moment they earn their bachelor’s degrees, black college graduates owe $7,400 more on average than their white peers ($23,400 versus $16,000, including non-borrowers in the averages).

"But over the next few years, the black-white debt gap more than triples to a whopping $25,000. Differences in interest accrual and graduate school borrowing lead to black graduates holding nearly $53,000 in student loan debt four years after graduation—almost twice as much as their white counterparts."

Scott-Clayton and Li continue: "While previous work has documented racial disparities in student borrowing, delinquencies, and defaults, in this report we provide new evidence that racial gaps in total debt are far larger than even recent reports have recognized, far larger now than in the past, and correlated with troubling trends in the economy and in the for-profit sector."

In a policy discussion at the conclusion of the paper, Scott-Clayton and Li write that "[n]ew repayment options such as the Revised Pay-As-You-Earn (REPAYE) plan may alleviate the worst consequences of racial debt disparities, while failing to address underlying causes" such as "systemic racial inequality resulting from historical discrimination (leading to low parental wealth), ongoing racial bias in the labor market, or predatory recruitment by for-profit institutions.

"Federal financial aid policy alone cannot solve these problems—but neither can it ignore the challenges facing students of color who disproportionately bear the burden of student debt."

To read the subscription-based Wall Street Journal story, click here or read it here [PDF of story].

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