The Racial Gap in Student Loan Debt Is Highest Among the Most Affluent Families

addoA new study led by Fenaba R. Addo, an assistant professor of consumer science at the University of Wisconsin-Madison, examines student debt levels of college graduates in relation to their families net worth.

The results of the study confirm that, on average, Black students tend to accumulate more student debt than White students. On average, an African American college graduate has 68 percent more debt than a White college graduate, according to the study.

But a key finding of study was that the racial gap in student debt was the highest among Blacks and Whites from more affluent families. The authors report that “the racial disparity in student loan debt is highest among those who come from the wealthiest families. That is, young adults from wealthy White families hold significantly less debt than their less affluent counterparts. In Black families, not only is debt higher, but there is no difference between wealthy Black families and less affluent Black families.”

In conclusion, the authors warn that “the increasing costs of higher education and corresponding rise in student loan debt are creating a new form of stratification for recent cohorts of young adults, and that student loan debt may be a new mechanism by which racial economic disparities are inherited across generations.”

Dr. Addo joined the faculty at the University of Wisconsin in 2014. She is a graduate of Duke University, where she majored in economics. Dr. Addo earned a Ph.D. in policy analysis and management at Cornell University. C0-authors of the study were Jason Houle of Dartmouth College and Daniel Simon of the University of Colorado at Boulder.

The study, “Young, Black, and (Still) in the Red: Parental Wealth, Race, and Student Loan Debt,” was published in journal Race and Social Problems. It may be accessed here.

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