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College Loan: A Dilemma for African Americans

According to the U.S. Census Bureau, 18 percent of African-Americans 35 years old and older had a bachelor’s degree or higher in 2010. Some 1.5 million African-Americans 25 years old and older had advanced degrees in 2010, and 2.9 million were enrolled in college in 2010, a 1.7 million increase since 1990.

While the increase in college enrollment for African-Americans over the past decade is impressive, having to rely on student loans to attend college presents a challenge for African-American students because they historically have had to borrow more money than their white, Asian and Hispanic peers to complete college.

The recent doubling of interest rates on student loans needed to finance undergraduate and graduate school could slow the enrollment and the graduation rates of African-American students, which will have a long-term effect on the black community.

In the past three decades, the cost of attaining a college degree has increased more than 1,000 percent. Two-thirds of students who earn four-year bachelor’s degrees are graduating with an average student loan debt of more than $25,000, and 1 in 10 borrowers now owe more than $54,000 in outstanding college loans.

According to the College Board, currently, more than 80 percent of African-American college students graduate with a significantly higher amount of debt than the 64 percent of white students who graduate with debt. With $864 billion in federal loans and $150 billion in private loans, student debt in America now exceeds $1 trillion.

The College Board also analyzed the relationship between student debt and race, finding that black students were more likely than Asians, Caucasians, and Hispanics to have higher debt levels. Only 19 percent of black students graduated with no debt, while the percentage of debt-free graduates from other racial groups ranged from 33 for Hispanic students to 40 percent for Asian students.

In addition, a recent Center for American Progress analysis on the impact of college education planning3 with student debt, on communities of color revealed that among students of color, blacks in particular, are saddled with more student loan debt: 27 percent of African-Americans graduating with a bachelor’s degree had more than $30,500 in debt, while the portion of students with that level of debt ranged from 9 percent to 16 percent for other races.

Furthermore, with Pell Grants facing cuts, many students of color who rely on these awards to help pay for school will be forced to borrow at even greater rates. This presents a serious dilemma for college students in general. The interest rate student loan interest rates doubling from 3.4 percent to 6.8 percent. The other side of this dilemma is the reality of the total indebtedness. According to the College Board, over the last decade, the total number of Stafford Loan borrowers increased by 95 percent, from 5.4 million in 2001-02 to 10.4 million in 2011-12. The average amount borrowed from subsidized and unsubsidized Stafford Loans combined increased by 8 percent, from $7,627 (in 2011 dollars) to $8,230 over this decade.

Why do these statistics present a dilemma that is much worse for African-Americans college students? One answer to this question can be found in the American Dream 2.0 report, a study conducted by a coalition of college presidents, civil rights leaders and advocates sponsored by the Bill & Melinda Gates Foundation. Their research found that 46 percent of college students do not graduate with a degree within six years. This compares to 63 percent of African-American students who do not do not earn a degree within six years.

According to the Journal of Blacks in Higher Education (JBHE), “the most important factor for the low college graduation rate of African-Americans and the large black-white gap in college completions is money.”

According to the JBHE research, “Two thirds of all blacks who drop out of college do so for financial reasons. Many black students decide they do not want to build up large debts. Others see financial aid awards reduced after their first year in school and do not want to assume additional expenses. At times, increases in tuition, fees, and the price of textbooks push the cost of education too high for black students.”

If African-Americans carry a higher percentage of student loan debt than Asian, Causcasian and Latino students, what impact might an increase of student loan interest rates have on the already troubling unemployment statistics among African-Americans?

Currently, the jobless rate among African-Americans is nearly twice that of white Americans. Dropping out of college may only contribute to the ongoing problem of employment disparity between blacks v. whites, Asians and Latinos. Employers who conduct background and credit checks as a precondition for employment may be less likely to hire an individual who 1) has not completed college and 2) has a poor credit rating.

A dilemma is nothing more than having to make a choice between two outcomes, both of which are undesirable. Owing college loans – especially if one hasn’t completed college — is undesirable enough. However, for the unemployed, owing college loans as interest rates for college loans are poised to double in the near future is far worse! The higher interest on money borrowed for college will make attending and graduating from college impossible for some and that is tragic.

I am reminded of the words of Charles Hamilton Houston, the great civil rights attorney, Howard University4 law professor and mentor to the first African-American Supreme Court Justice, Thurgood Marshall, who said, “Without education, there is no hope for our people and without hope, our future is lost.”

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