Students in majority Black and Latino neighborhoods are more likely to take on student debt and disproportionately struggle to pay it back at higher rates than their white counterparts, a new report finds.
Students of color are more likely to take on student debt and disproportionately struggle to pay it back at higher rates than their white counterparts, perpetuating a"vicious cycle" of economic inequality along racial lines, research released Monday suggests.
The report by the Student Borrower Protection Center, a consumer advocacy group, analyzed previous borrower data prepared by regional Federal Reserve banks and the city governments of New York City, Washington, D.C., Philadelphia and San Francisco and found a commonality that students in majority Black and Latino neighborhoods are more reliant on student loans and shoulder a greater debt burden.
For instance, in Washington, 6 of the 8 neighborhoods in which student debt is growing the fastest are majority nonwhite, including Anacostia, Deanwood and Congress Heights. Average student debt balances increased by as much as 217 percent in several majority-Black neighborhoods, compared to a 30 percent decrease in some of the whitest neighborhoods.
A similar trend played out in New York, San Francisco and Philadelphia, according to the analysis. In New York, six neighborhoods in the highest tier of student loan delinquency are majority nonwhite and mostly concentrated in the Bronx, which also has the highest 90-day delinquency rate of any area in the city despite the fact that borrowers have smaller median loan balances.
A student loan is considered delinquent when a payment is not made by the due date, and the borrower can be considered in default if a payment isnt made for an extended period, typically 120 days for a private loan andIn Philadelphia, the rate of student loan default is more than twice as high in majority nonwhite neighborhoods as it is in majority-white neighborhoods.
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