From InsideHighEd:
The original study:
Lower income African Americans have been disproportionately victimized by the for-profit colleges with the highest borrowing and default rates.
Would be more interesting if the default rates were stratified by (a) parental income/wealth, and (b) student high school academic credentials.
On (a), students from poor families are more likely to need to borrow, or borrow more, than those from non-poor families. On (b), students with stronger high school academic credentials are more likely to gain admission to colleges with better financial aid (which tend to be more selective), or earn merit scholarships at less selective colleges.
Aggregated data makes for great headlines but provides no useful information. I’ll wager there is no crisis for black MIT engineering graduates or black Michigan business graduates.
The culprit is federal government backed student loans. If there were only private lenders someone would make sure students would have earning power from their study to repay loans.
I think default should carry more weight than it does. This talk of “pay off my debt” infuriates me.
Because I like so many saved, sacrificed, and still make my 515$/mo payment.
Black MIT and Michigan graduates don’t make up the vast majority of black college graduates in the country, though. They’d be more outliers. And also, we don’t know - maybe they aren’t in crisis but maybe they are less likely to repay their loans quickly than their peers with similar credentials, which would still be bad.
Well, if there were only private student loans then a lot fewer people would be able to attend college, including a whole lot fewer lower- and middle-income students. Besides, nobody can determine a students’ future earning power - someone could major in computer science and decide to become a social worker later, or major in engineering and become a teacher. Conversely, someone might major in history or philosophy and get an MBA and go into a high-paying business career, or major in psychology and go into a technology career.
The article also states that income didn’t explain the results.
First, the numbers are swamped by the huge numbers of blacks who attend for profits and as an earlier posted noted, those for profits target low income and minority communities with misleading ads and false promises.
Second, as the article notes, there are enormous differences by race in wealth accumulation, including home ownership. It is FAR more common for white students to have parents who help with some expenses and in fact, it is FAR more common for white college graduates to have parents provide financial backing to jump start careers in major metropolitan areas. For example, I read a report recently that talked about the large percentage of white college grads whose parents pay part or all of their rental housing costs in urban centers so that they can get started in high paying careers. College graduates without such support are unable to make those early career investments that can pay off in the long term. In addition, nonwhite college graduates are far more to be helping family members instead of getting help from parents.
The ease of default does not explain racial difference.
Finally, on the issue of government sponsored loans being the culprit - my best guess is that there are substantial racial differences, holding income constant, in default rates for private loans. Just as there is no easy explanation, there are no easy answers.
^If parents involvement and contribution are big reason for the racial disparity in defaults then you have to get rid off difference in single parent family rate among different groups. I wonder how anyone would be able to accomplish that.
As others have mentioned the data is useless. It would help if they removed kids who attended for profit colleges.
I’m sure as you look at the parents income the rates of default go down as parental income increases. We like many other black families were able to help our kids quite a bit while in college and after college. Unlike my husband and I, my kids aren’t saddled with a ton of student debt. All three have very small student loans. We were able to give them cars, pay phone bills, pay deposits on the first apartments after college, buy furniture and other things of that nature. When a new grad has all of those things taken care of, that leaves money to pay any student loans they may have.