Interdisciplinary Studies senior Josh Thompson, 29, is on track to graduate from Middle Tennessee State University in 2018. The day he walks the graduation line will be one of the happiest of his life. He met the challenges. He persevered. He will have his diploma.
Thompson, who is the first from his family to earn a diploma, will also be in debt for approximately $30,000, which he estimates will cost him about $450 a month in student loan payments. The debt worries him.
Thousands of other African American students across the country are facing the same dilemma: receiving a degree, but at a high price.
According to a Brookings Institution report released in October 2016, black undergraduate students in America owe more than their white classmates. The report indicates that black graduates receiving bachelor’s degrees owed $23,400 while white graduates owed, on average, $16,000.
The Tennessee Board of Regents does not track student loan debt by race, making it difficult to know how the numbers at MTSU stack up against the national average. However, the Center for American Progress found that 27.9 percent of black households in Tennessee had some kind of education debt in 2009, while 15.9 percent of their white counterparts had education debt. The CAP is a Washington, D.C. think tank that describes itself as nonpartisan and progressive.
A 2016 study by The Institute for College Access and Success reports that 60 percent of Tennessee students will graduate with debt, with the average student leaving a four-year public or private not-for-profit institution with $26,083. At MTSU, 65 percent of students graduate with debt, according to TICAS, with the average student having accumulated $25,352.
According to the Fall 2016 MTSU Census Report, 21 percent of MTSU students identify as black, 65 percent identify as white and the remaining 14 percent identify as another minority or chose not to disclose their ethnicity. Currently, there is no way to know how black graduates’ debt and white graduates’ debt compare at MTSU because those numbers are not being tracked.
Still, many black MTSU students will graduate with even more debt than the $23,400 national average for black students and the $25,352 MTSU average for all students.
Jennifer Woodard, associate professor of electronic media communication at MTSU, has observed this trend for over two decades. She has been teaching journalism courses and mentoring students at MTSU since 1993, with a brief hiatus in the late 1990s to complete her Ph.D. in Mass Communication, with special emphases on race, class and gender in media and communication, culture and technology in media, at Indiana University-Bloomington.
In addition to mentoring several of her students in an unofficial capacity, Woodard serves as advisor to MTSU’s student chapter of the National Association of Black Journalists.
She was “not surprised at all” to learn that black students graduate $7,400 further in debt than white students, nationally.
Through her study of race and class-related topics and her mentoring relationships with students over the years, Woodard has learned that black students often have to take out more loans than their white counterparts from day one.
“African Americans accumulate more debt because they have less help on the front end,” Woodard said. “If your parents can’t help you, then they can’t help you with a car. They can’t help you with your housing. They can’t help you with your books. They can’t help you with tuition. . . They can’t help you in ways that a middle class white student’s parents may be able to help them. So, you have to take out more money just so you can live.”
Woodard said the debt disparity is a generational issue that is directly related to the differences in accumulated wealth between African Americans and White Americans.
“Historically, African Americans have not been able to accumulate the same amount of wealth as White Americans because most of your wealth is in your home. If you have generations where a home has been passed down. . . you have equity that’s built up in your house that you can pull out to buy your car or pay your children’s tuition,” Woodard said. “If you’re renting, then you don’t have that accumulation of wealth, and traditionally, African Americans haven’t been able to own homes in the same ways that White Americans have because they haven’t had the access.”
Woodard encourages her students to keep their undergraduate debt at about $20,000, in order to keep their payments manageable while working an entry-level job. She also teaches them about alternative ways to accumulate wealth after graduation, like investing in stock and a 401(k) plan. She hopes this helps her students achieve class stability, especially students who may be trying to enter the middle class from a working class family.
“Getting a college degree gives you access to the middle class, but being able to stay there means you used that access to accumulate wealth,” Woodard said.
Thompson, the 2018 graduate who will take on $30,000 in debt, said he receives about $2,000 in grants and scholarships each semester, but has to take out federal student loans to cover his books and living expenses, in addition to the rest of his tuition.
“It would be impossible to attend school and have a place to live if I didn’t take out loans for living expenses since I’m on my own. I still have a part-time job to help with food,” Thompson said. “The one semester that I didn’t work, I ran out of money over a month before the semester ended. I got better grades, but I was starving and had to ask for help to pay for the last semester month’s worth of rent.”
So far, Thompson has only taken out subsidized and unsubsidized federal student loans, but he fears he may have to take out private loans before graduation. He plans to teach middle school mathematics after earning his degree and would like to go to graduate school, but said money is a deterrent, especially since he would have to take out additional loans to cover the costs.
Visual Communications senior Jonathan Pointer, 23, is facing a similar situation. If all goes as planned, Pointer, who transferred to MTSU from Columbia State Community College (Franklin, Tennessee) three years ago, will graduate in 2018 and enter the field of game design.
He expects to have between $32,000 and $42,000 in student loan debt when he finally gets to throw his cap in the air.
“I normally find myself taking out the maximum amount in student loans. Of course, to cover tuition, but I need the money to cover living expense as well,” Pointer said. “I have always had more than one job. Even living on campus, I took out loans to cover my dorm and meal plan, but I still had bills to pay. During my years of living on campus, I would pay my own bills and pay bills that my parents needed help with.”
Pointer recently moved off campus and continues to take out the maximum amount of aid offered. He uses his refund to cover rent, pay other bills and keep his car in good working order.
He plans to start making loan payments during the six month grace period after graduation and hopes to have all his debt paid within 10 years. Like Thompson, Pointer wants to pursue a graduate degree, but he is hesitant to take on more schooling while still in debt from his undergraduate education.
Judith Scott-Clayton and Jing Le, the researchers behind the Brookings report, calculated the debt disparity between black and white students and hypothesized its causes and consequences by extracting data from the U.S. Department of Education’s two most recent Baccalaureate and Beyond Longitudinal Studies (B&B) and pairing it with other available Department of Education and Census Bureau data.
“Racial disparities in student debt are larger than previously understood, and have grown dramatically in recent decades,” the report reads.
A B&B survey focused on 2008 college graduates found that black undergraduate students had accumulated an average debt of $23,400 on graduation day, $7,400 more than the average white undergraduate student’s $16,000.
The disparity continued to grow after students’ collected their diplomas. The 2008 B&B survey found that, while white students who graduated with a bachelor’s degree in 2008 owed an average of $28,006 in 2012 (a $12,006 increase), their black counterparts owed an average of $52,726 (a $29,326 increase). The initial $7,400 difference had more than tripled in the first four years after graduation, ballooning to $24,720, due in large part to black graduates’ increased enrollment in for-profit graduate programs.
Using restricted data from B&B surveys conducted on 1993 graduates and 2008 graduates, Scott-Clayton and Le found that the black-white debt disparity after four years has grown substantially over time. The average white student who graduated with a bachelor’s degree in 1993 owed $6,917, while their black peers owed $8,723 (in 2012 dollars). This means the average black-white student debt disparity at four years after graduation increased from $1,806 to $24,720, a total of $22,914, over 15 years.
After noticing such stark a difference between the amount of debt black and white students owed four years after graduation, Scott-Clayton and Li used data from the 2008 B&B survey and data from the National Center for Education Statistics to calculate where black students’ increased debt originates.
The extra $7,400 black students owe on graduation day “represents less than a third (30 percent) of the nearly $25,000 black-white gap in total debt that exists four years later. For blacks, undergraduate debt at graduation accounts for less than half of total debt owed, compared to 62 percent for white graduates,” according the Brookings report.
The researchers calculated that graduate school borrowing accounts for 45 percent of the debt disparity, undergraduate borrowing is responsible for 30 percent and “differences in rates of repayment and interest accrual” make up for the remaining 25 percent.
In terms of net repayments, “black graduates owe 6 percent more than they have borrowed, while white graduates owe 10 percent less than they have borrowed, four years after graduation,” the report reads.
The researchers hypothesized that the difference could be due to the highly studied black-white wage gap and black graduates’ increased likelihood to enroll in graduate school, allowing them to defer loan repayment.
“Among full- and part-time workers in the U.S., blacks in 2015 earned just 75 percent as much as whites in median hourly earnings,” according to a 2016 Pew Research study.
The Brookings report also noted that, while overall default rates have decreased since 1993, black borrowers who graduated in 2008 are still three times more likely to default (7.6 percent) than white borrowers (2.4 percent) who graduated the same year. Among the 2008 cohort, black borrowers were also about 7 percent more likely than white borrowers to have student loan payments in an amount upward of 15 percent of their income.
Findings presented in the Federal Reserve’s Report of Economic Well-Being of U.S. Households in 2015 support Scott-Clayton and Li’s claim that black graduates owe more and default more often than white graduates. The Federal Reserve’s study found that 76 percent of black graduates between 18 and 44 owed student loan debt and were not behind on their payments compared to 60 percent of white students who owed student debt and were making payments on time. They also found that 14 percent of black graduates owed student debt and were behind on payments, while only 5 percent of indebted white graduates were behind on payments.
As noted above, the Brookings report found that graduate school borrowing made up for nearly half (45 percent) of the black-white student debt disparity four years after undergraduate graduation.
“Graduate school enrollment rates increased substantially for blacks between the 1993 and 2008 cohorts, much more so than for other groups, and the differential growth has occurred almost exclusively in the for-profit sector,” according to the report.
The 2008 B&B survey found that 47 percent of black students who graduated in 2008 enrolled in graduate school within four years compared to only 38 percent of their white peers. Among the students studied in the 1993 B&B survey, 38 percent of blacks went on to graduate school within four years compared to 35 percent of whites.
Over the past 15 years, black students have gone from being 3 percent more likely than white students to pursue a graduate degree to being 9 percent more likely than white students to pursue a graduate degree.
“While this may be a positive trend in general, we also find that among graduate school enrollees, more than a quarter (28 percent) of black graduate students enroll in for-profit institutions—compared to just 9 percent among white graduate students,” the Brookings report reads.
Black enrollment at for-profit institutions has skyrocketed, while black enrollment at both public and private not-for-profit institutions has remained constant.
The Federal Reserve’s Report of Economic Well-Being of U.S. Households in 2015 broke down total student loan debt by institution type, finding that 21.4 percent of all for-profit graduates are behind on student loan repayments. Only 4.6 percent and 6.6 percent of graduates from private and public not-for-profit institutions, respectively, were behind on student loan debt.
While the Federal Reserve’s report did not break numbers down by race within each institution type, the Brookings report traced black graduates’ increased enrollment in for-profit graduate institutions to the increasing debt disparity. The Federal Reserve’s finding that graduates from for-profit institutions are about 15 percent more likely to be behind on loan payments than graduates from other institutions helps support the Brookings report’s assertion.
The Brookings report suggests the substantial growth in black enrollment in graduate programs can be traced back to the Higher Education Reconciliation Act of 2005, which greatly increased the amount of federal money graduate students are allowed to borrow.
“The expansion of graduate loans may have had a differential effect on black graduates, who have less parental wealth to draw upon. And for-profit institutions—where the typical graduate enrollee racks up $33,000 in debt—may have been quickest to respond to the new market opportunity,” according to the report.
The report also stated that the increase could be due, in part, to the Great Recession’s weaker labor market. The 1993 B&B survey found that black graduates were actually 1 percent more likely (90 percent) than white graduates (89 percent) to be employed four years after earning a bachelor’s degree, but the 2008 B&B survey observed a large drop in employed black graduates (72 percent) while white graduates experienced a much smaller drop in employment (83 percent).
A 2014 study by the Center for Economic and Policy Research corroborated the Brookings report assertion that the Great Recession hit black graduates harder than white graduates. The study found that the unemployment rates for black and white recent college graduates were virtually identical in 2002, with both sitting just under 5 percent. By 2013, the unemployment rate for black students had risen to 12.4 percent, while the unemployment rate for white students sat at 5.6 percent.
Researchers like Scott-Clayton and Li are calling for increased tracking of the correlation between student loan debt and ethnicity on both the national and state levels. They hope better tracking will lead to research that explains how to close the black-white education debt disparity and greater public awareness of race inequity.
This story originally ran in MTSU Sidelines’ February 2017 print edition. For more information, contact Editor-in-Chief Sarah Grace Taylor at firstname.lastname@example.org