Table 2 above shows that two-thirds of White graduates were making payments under the standard plan, while only slightly over half of Black graduates were doing so. Thus, while Black students are far more likely to borrow than White students, the amount borrowed conditional on taking out loans is comparable across races.Įven though students from both races borrow similar amounts, differences in student loan repayment appear immediately upon graduation. Also, Black students who borrowed took on nearly $32,000 in student loans on average, about 12 percent more than the average amount of White students who borrowed. The BPS reveals that majority of bachelor's degree recipients take out student loans: Table 1 below shows that nearly two-thirds of White students and over 85 percent of Black students took out federal loans to fund their undergraduate degrees. We use data from the BPS 2012/2017, which is the second follow-up of students who began their postsecondary education in the 2011-2012 academic year. Our first data source is the Beginning Postsecondary Survey (BPS), which surveys first-time students in the first year of their postsecondary education and follows up with them after three years and six years. We focus on federal student loans taken out to fund undergraduate education, which make up the bulk of student loan borrowing in the U.S. In this Economic Brief, I document student loan borrowing, repayment, and default behavior among college graduates, highlighting differences between Black and White borrowers. Yet, despite these financial benefits, we observe defaults on student loans even among college graduates, with systematically higher default rates among Black graduates compared to White graduates. Graduating from college greatly increases lifetime income and reduces unemployment risk on average.
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