![]() Because the survey is a panel, we can observe participants as they make decisions about school, work and finances over time. The NLSY97 is a nationally representative panel survey of people born during between 19 who were first interviewed in 1997. To examine this, we use the National Longitudinal Survey of Youth 1997 (NLSY97). We turn next to the relationship between race, student loan borrowing and earnings to see whether this can shed light on the channels connecting race and student loan default. ![]() Race, Student Loan Borrowing and Earnings The difference by race is striking, with nearly 30 percent of Black borrowers reporting having defaulted on a student loan compared to only 10 percent of White borrowers. Among the questions asked is whether the individual ever defaulted on a federal student loan. To examine this, we use the 2008/18 Baccalaureate and Beyond Longitudinal Study, which surveys individuals who earned a bachelor's degree in the 2007-08 academic year 10 years after they received the degree. Nearly a third of Black graduates were on an income-based repayment plan, compared to less than 20 percent of White graduates.īefore we get into how race may play a factor in student loan default, we want to examine just how widespread defaults in general are. Table 2 above shows that two-thirds of White graduates were making payments under the standard plan, while only slightly over half of Black graduates were doing so. Thus, while Black students are far more likely to borrow than White students, the amount borrowed conditional on taking out loans is comparable across races.Įven though students from both races borrow similar amounts, differences in student loan repayment appear immediately upon graduation. Also, Black students who borrowed took on nearly $32,000 in student loans on average, about 12 percent more than the average amount of White students who borrowed. The BPS reveals that majority of bachelor's degree recipients take out student loans: Table 1 below shows that nearly two-thirds of White students and over 85 percent of Black students took out federal loans to fund their undergraduate degrees. We use data from the BPS 2012/2017, which is the second follow-up of students who began their postsecondary education in the 2011-2012 academic year. Our first data source is the Beginning Postsecondary Survey (BPS), which surveys first-time students in the first year of their postsecondary education and follows up with them after three years and six years. We focus on federal student loans taken out to fund undergraduate education, which make up the bulk of student loan borrowing in the U.S. In this Economic Brief, I document student loan borrowing, repayment, and default behavior among college graduates, highlighting differences between Black and White borrowers. Yet, despite these financial benefits, we observe defaults on student loans even among college graduates, with systematically higher default rates among Black graduates compared to White graduates. The relevant institutions include schools like Corinthian Colleges and DeVry University.Graduating from college greatly increases lifetime income and reduces unemployment risk on average. The White House has approved $14.7 billion in debt relief for 1.1 million student loan borrowers "whose colleges took advantage of them or closed abruptly," like those at CollegeAmerica, Biden said. Loan payments are slated to resume in October after a pause of more than three years. Department of Education found that CollegeAmerica's parent company - the Center for Excellence in Higher Education - "made widespread misrepresentations about the salaries and employment rates of its graduates, the programs it offered and the terms of a private loan product it offered," Weiser said in a statement Tuesday.īiden's action follows a Supreme Court ruling last month that killed a White House plan to forgive up to $20,000 of student debt per borrower. More from Personal Finance: Is Biden's $39 billion student loan forgiveness action legal? When student debt payments restart, your loan type will make a big difference Can employers be a firewall for student loan borrowers? He had petitioned the Biden administration last year to erase CollegeAmerica student debt. ![]() 1, 2006 and July 1, 2020, the year in which the school closed its campuses, Colorado Attorney General Phil Weiser said. ![]() The action affects students who attended the school's Colorado-based locations between Jan. Personal Loans for 670 Credit Score or Lower Personal Loans for 580 Credit Score or Lower Best Debt Consolidation Loans for Bad Credit ![]()
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