In “The Debt Divide: The Racial and Class Bias Behind the ‘New Normal’ of Student Borrowing,” Demos senior policy analyst Mark Huelsman details a system that is highly stratified along class and racial lines. The nation’s debt-financed system for college enrollment not only produces higher loan balances for low-income, Black, and Latino students, but also results in high numbers of low-income students and minority students leaving school without receiving a credential, according to the report.
The author draws upon data from three U.S. Department of Education surveys, the Federal Reserve’s 2013 Survey of Consumer Finances, and existing academic literature, for the analysis.
“I think what’s really been missing from [national discussions on student loan debt] is an understanding in how our move to a primarily debt-based system of financing higher education has impacted our notions of racial and class equity,” Huelsman told Diverse. “We haven’t seen a ton of analysis on which communities are most impacted by our shift to a high debt system.”
Huelsman said that, while college has been regarded as a key path in American society for economic mobility, its shift in recent years toward a largely debt-financed system has proceeded with little regard to how that move would impact different communities. The system now is “pushing students of color and low-income students even farther down the ladder, adding an additional level of risk that previous generations did not take on when paying for college, and saddling them with additional disadvantages as they enter the workforce,” he noted.
“We cannot ignore the reality that our dramatic shift to a debt-for-diploma system has greatly shrunk the opportunity for economic and social mobility among young people of color and working class youth. This debt-based system has transformed higher education into a system that hardens race and class privileges rather than ameliorates them, limiting a new generation from fulfilling their dreams and utmost potential,” said Tamara Draut, the Demos vice president of policy and research, said in a statement.