Wednesday, February 27, 2013

student loan debt and net-worth gap by race

There's another study that shows how the gap in net worth grew by race in America; whereas a previous study demonstrated that African Americans own about a nickel for every dollar whites have secured in Roth IRAs, houses, cars, or collectible baseball cards, this one focuses on families and has the net-worth gap rising to $236,500 in 2009. Here's a paragraph from The Washington Post's article on the study:

Despite that progress, the wealth gap between whites and blacks nearly tripled among study participants, going from $85,000 per family in 1985 to $236,500 in 2009. Overall, the median net worth of whites in the study was $265,000 in 2009, compared with $28,500 for blacks. A broader survey done by federal officials has found even larger disparities, with blacks having a nickel of wealth for every dollar of wealth owned by the median white family.

Although the article focuses on how real estate and employment opportunities, or lack thereof, have exacerbated this discrepancy, we should also consider that student loans have played a role as well. On the one hand, the one with the positive digits attached to it, so to speak, many more African Americans have been able to attend and graduate from undergrad and graduate schools over the same time period, and it should be recognized that this is largely a positive outcome of making college more "accessible" to everyone.

On the other hand, and yes, I'm not ambidextrous but you've come to expect to hear from this sad soggy fish, because African Americans arrive on campus from disproportionately poorer backgrounds, they are much less likely to be getting help from family and much more likely to require financial assistance to go to college. Despite any "advantage" they may have at the financial aid office, it's almost undoubtedly the case that African Americans are taking on more debt, particularly if we look at debt-to-degree ratio (compare debt by race at equal levels of attainment and not compare, for example, the debt of a white law-school student to a black undergrad).

If you look at the total picture, not just the loan debt of graduates, but all who attend as well as all who fail to graduate, and then include the community colleges and for-profits, you will see a clear picture of how "higher education" as currently practiced in America unfortunately fails to ameliorate the black-white wealth gap and in fact contributes to the widening difference.

(And, yes, I understand how this could seem anomalous, or unlikely, from a reader's perspective if the reader is a white student from financial hardship or supposed American middle-class "affluence," who has been burdened by student-loan debt, while the reader has noticed a black student from similar circumstance, or even wealthier circumstances, come to receive better grant aid from a specific college and even the much cherished fellowship or "free ride.")

Overall, these are my strong suspicions, of course, and not something I've had to time to "study" or write a peer-reviewed article on. As it happens, I was mostly too busy teaching school.

*In 2017, I've seen student debt for an undergraduate degree cited as above $37,000 for an "average"--what I assume to be a mean--and around $31,000 for median debt. Various articles suggest 70% of college graduates hold debt; it's harder to find exact information on debt held by students who do not complete the degree.

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