How Student Loan Debt Impacts the Racial Wealth Gap Years After Students Complete College

Over the years, JBHE has documented racial disparities in student loan debt. For example see JBHE posts here and here.

But a new study by led by Min Zhan, professor of social work at the University of Illinois, shows that the burden of student loan debt impacts the racial wealth gap long after students leave college. The study of nearly 1,500 young adults found that Black and Hispanic students who had accumulated student loan debt during their college years had, at age 30, $36,000 less in net worth than their peers who did not have student loan debt. Black and Hispanic students who had student loan debt when they graduated accumulated $11,780 less in financial assets and nearly $39,600 less in nonfinancial assets than their peers.

Dr. Zhan noted that “the findings are concerning because they suggest that education loans may compromise minority students’ wealth-building longer than previously thought. They also show evidence that education loans negatively impact both the financial and nonfinancial assets of Black and Hispanic young adults.”

The authors of the study concluded that “addressing college students’ financial needs with additional education loans and other types of credit may be counterproductive for minority young adults’ future financial health and may even magnify racial/ethnic disparities in wealth.”

The full study, “Education Loans and Asset Building Among Black and Hispanic Young Adults,” was published in the August issue of the journal Children and Youth Services Review. It may be accessed here. The study was co-authored by Xiaoling Xiang, an alumna of the University of Illinois who is now a professor of social work at the University of Michigan.

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  1. Jah and Jahnes love. I know that Student Loan debt will impact my ability to build wealth. Still, I am really happy that Student loans were available to me because I have been able to achieve my goal of pursuing College and University Degrees that will make me elligible for Academic jobs. I think that the U.S. Government should forgive some percentage of Student Loan debt for Blacks whose ancestors were enslaved by Europeans on the Territory. And employers should pay off a percentage of Black Students’ loan debt as part of their Minority Recruitment Initiative. Other ways that Black and Brown Students could pay off Student Loan debt could include working in the Neighborhoods that they originated from for a some time during the month/year to help train the future generations. On my part, I plan to pay off my Student Loan debt as well as those of other Students. Blessed love.

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