According to Demos, black and Latino students are dropping out of college with debt at higher rates than white students. At all schools, almost 40 percent of black borrowers drop out, compared to 29 percent of whites. More than two-thirds of black and Latino student borrowers at for-profit, four-year schools drop out. Meanwhile, nearly a third of low-income student borrowers at public four-year schools drop out, a rate 10 percent higher than student borrowers on the whole.
Across the racial and socioeconomic spectrum, Americans with student debt are delaying home and auto purchases, according to the Federal Reserve, a trend that stands to dampen economic growth. But the impact of student debt is more pronounced for black and Latino households that have a fraction of the wealth of whites and have for decades been shut out of traditional ladders of economic opportunity, according to Demos. And in many ways the same can be said for low-income households of all races.
“We have created a system in which more underrepresented students take on debt and drop out with debt, thereby saddling communities of color and those with modest means with substantial disadvantages as they enter the workforce,” Huelsman said. “We also see worrying signs around the impact of student debt on the ability to build wealth and assets, find a satisfying or civic-minded job or start a business.”