A new study by researchers at Student Loan Hero, a division of mortgage loan operator Lending Tree that helps students manage their debt, finds that Black students borrow 35 percent more on average in student loans than their non-Black peers, but Black millennial bachelor’s degree-holders earn 22 percent less than non-Black grads.
Despite earning that invaluable bachelor’s degree, Black millennials — those ages 23 through 38 in 2019 — working full time throughout the year earned 22 percent less ($44,498 versus $56,731) than their comparably educated and employed peers. That percentage represents an income gap of more than $12,000.
Black millennials out-earned their non-Black peers in just three states, but the difference is minimal. Oregon, Maine, and Alaska each recorded higher average earnings for Black millennial graduates than other workers, but only by an average of 2 percent — or roughly $1,200.
Researchers found the worst wage gap for Black millennials was in Montana, where Black bachelor’s degree graduates working full time earn 50.3 percent less on average than non-Black workers. The next largest racial wage gap for millennials crops up in South Dakota, where Black earners take home 35.8 percent less, on average, than their peers. Seven other states and the District of Columbia had a racial wage gap of 25 percent or more for millennials with a bachelor’s degree.
The smallest wage gaps were in North Dakota, Maryland, and Wyoming.
The unfortunate truth is that even if all the racial wage gaps ceased to exist, it’s likely African American college grads would still be struggling to catch up to their non-Black peers because they have higher levels of student debt.
The longer it takes to pay off loans, the more borrowers end up paying back. “Thanks to the power of compounding interest, many borrowers find themselves repaying twice or three times what they originally borrowed,” Andrew Pentis, senior writer for Student Loan Hero, explains.