Study: Student Loans Weigh the Heaviest on Black and Hispanic Students

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Student loan debt weighs more heavily on students of color than on their white counterparts.

An estimated 86.8% of black students borrow federal student loans to attend a four-year public college, as opposed to 59.9% of white students, according to the National Center for Education Statistics (NCES).

With rising tuition costs outpacing inflation and wage growth, many students are struggling to afford college. In fact, about 44 million Americans owe over $1.48 trillion in student loan debt.

But according to our in-depth analysis of data from Demos and NCES, black and Hispanic students are paying more when it comes to student loans than white students.

Key findings: Students of color carry the most student debt

  • Black students borrow federal student loans at higher rates than other groups of students. An estimated 77.7% of black students borrow federal student loans to pay for a higher education. This figure is significantly higher than the national average for all students (60%) and for white students (57.5%).
  • Among class of 2012 graduates, Hispanic and black students graduated with higher amounts of student debt from private nonprofit colleges than white students. Black students also borrowed more at public colleges than white students.
  • Among black students who started school in 2003, 1 in 2 defaulted on student loans within the following 12 years. Black students also saw their starting balance grow by a median 113% in that time frame. The rates of default were lower for Hispanic (36.1%) and white (21.5%) students.

77.7% of black students borrow federal student loans to pay for college

When the NCES looked at rates of student loan borrowing by race and ethnicity, it uncovered an undeniable fact: Overall, black students are more likely to take on debt to earn a higher education. This is true at public and private, two-year and four-year, and for-profit and nonprofit schools.

The disparity is greatest at public four-year colleges, where black students borrow at a rate of 86.8%. Across all types of colleges, black students borrow at a rate of 77.7%, a figure significantly higher than the overall average of 60%.

Hispanic students also borrow at relatively high rates: 65% at public four-year colleges and 73.5% at private four-year colleges. However, Hispanic students borrow at a lower rate (39.9%) for public two-year colleges compared to white (46.4%) and black (62.5%) students.

“Not only are students of color more likely to borrow more for a degree, and borrow in higher amounts for the same degree, but they’re more likely to struggle to repay student loans than white students,” said Mark Huelsman, a senior policy analyst for Demos. “Students of color are also overrepresented at for-profit colleges and universities which account for a very large proportion of student loan defaults.”

The rates of borrowing across all groups are high at for-profit colleges. This is a worrisome fact in light of the questionable practices of some for-profit schools. Students who go into debt for a for-profit institution might graduate without the qualifications or skills training they were promised.

Black students also graduated with the highest amount of debt from public colleges in 2012 — $29,344, on average. Hispanic students, though, had the highest burden among those who attended private colleges, with an average debt of $36,266.

These numbers are likely even higher today. The average college graduate in the class of 2016 left school owing $37,172. As tuition rates continue to rise, students are going into greater debt to pay for their degree.

High student debt goes hand in hand with low income

No discussion of student debt and race would be complete without a look at household income.

“We cannot think of student loan debt in isolation from other areas of our economy,” said Huelsman. “For example, long-standing racism in the labor market has resulted in a country where black families with college degrees have lower average net worth than white families with a high school education or less.”

Twenty years ago, white households held a net worth seven times that of black households and six times that of Hispanic households, according to Demos data that Huelsman noted. After the recession, that disparity increased to 13 times and 10 times, respectively.

Dr. Robert Kelchen, an assistant professor in the Department of Education Leadership, Management, and Policy at Seton Hall University, discussed how students of color can be affected by economic inequality.

“The big issue is the large wealth gap between minority and white families,” Dr. Kelchen said. “It’s a lot harder to repay loans when nobody in your family can help you pay them off. Unemployment rates also tend to be higher for black and Hispanics, which makes repaying loans more difficult.”

The graph above shows the difference in median household earnings among races. Black households earned $39,490, Hispanic households earned $47,675, and white households brought in $65,041. Asian households had the highest median income at $81,431. Correspondingly, Asian students had the lowest rates of borrowing for college.

The unequal burden of student loan debt further aggravates disparities, since a big loan payment can make it difficult to build your career, grow your income, and achieve financial independence.

In 2014, among workers aged 25 to 34 who held a bachelor’s or higher degree, black households earned 23% less than the median for the overall population. Hispanic households earned 25% less.

If you’re struggling to make payments on federal student loans, speak to your loan servicer about your options. You could go on an income-driven repayment (IDR) plan, enter forbearance, or even pursue student loan forgiveness options.

Although these solutions don’t address the root problems that lead students into debt, they can help you manage your situation and avoid student loan default.

Indebted black students have the lowest graduation rates

While black students are more liable to borrow to pay for college, they also have the lowest graduation rates.

Among bachelor’s degree-seeking students entering a four-year program in 2008, just 21% of black students graduated from college in four years. Compare that to the 30% of Hispanic students, 44% of white students, and 48% of Asian students who graduated within that time frame.

According to The New York Times, the cost of college is a major obstacle to graduating on time. Many students can’t afford to continue or become overwhelmed from working long hours while studying for a degree.

Along with unequal graduation rates, we also see differences in educational attainment from adults aged 25 and older. The greatest number of bachelor’s degree holders are white and Asian.

Since a bachelor’s degree can boost earnings significantly over your lifetime, not having one can aggravate inequities among racial and ethnic groups.

Nearly 50% of black students default on their student loans

Student loan defaults are on the rise. The Wall Street Journal reported that the number of Americans in default on student loans reached 4.6 million in the third quarter of 2017.

NCES took a long-term look at the rates of default among students who started college in 2003. It found that nearly 1 in 2 black students had defaulted on a student loan within 12 years of starting school.

Among Hispanic students, the rate of student loan default was 36.1%. Among white students, the rate of default was 21.5%.

“Underrepresented minority students are far more likely to default on their student loans than are white and Asian students, even when conditioning on the type of college they attended and whether they graduated,” said Dr. Kelchen. “Minority students tend to have higher debt burdens and have more difficulty paying these loans off than other students.”

If you’re in danger of defaulting, switching to an IDR plan on your federal loans could help.

“If someone signs up for this program and loses their job, they likely won’t have to make any payments while not going into default,” said Dr. Kelchen. “Be warned that the paperwork for these programs can get tedious, so start it early and reach out to your student loan servicer or your former college for help if needed.”

That being said, signing up for an IDR plan could mean your student loan balance continues to grow. That could leave you in debt longer, even if you could eventually earn student loan forgiveness.

Additionally, black students owed a median 113% of their original balance after 12 years of starting school. White and Hispanic students also had more than half their debt left after 12 years.

Student loans get in the way of building wealth

Student loan debt stands in the way of homeownership and saving for major life goals. An estimated 64% of bachelor’s degree-holding households without student debt own a home. Among degree-holding households with student debt, only 53% own a home.

Further, those with a bachelor’s degree but no education debt have saved an average of $98,687 for retirement. Bachelor’s degree recipients with loans have less than half of that with an average savings of $42,751.

However, those with student debt that didn’t finish college have only saved an average $25,510 for retirement. This shows that while a college degree could set you back financially, it might still be worth the cost.

“Whereas workers could once rely on employer-sponsored pensions to cover their retirement savings, we now have a system in which most people must save for their own retirement in addition to meeting all of these other costs, monthly student loan payments included,” said Huelsman.

“For communities with less wealth, it takes a major toll,” he continued. “The result is that many of the trends that created racial inequality in our economy have only expanded.”

Although a bachelor’s degree still corresponds with higher earnings and assets, its value is undercut if you have to take out student loans.

It also doesn’t help that wage growth has stalled.

“Wages have stagnated for the vast majority of American workers,” Huelsman said. “Employers have engaged in fewer job training opportunities, and other costs in our economy (child care and healthcare to name a few) have increased nearly as much as the price of college.”

How borrowers can overcome the burden of student debt

When you break down student loan debt by race and ethnicity, the disparities within this national burden become clear.

If you’re a student loan borrower, educate yourself by seeking out financial resources to help you deal with your student debt. American Student Assistance, for example, offers free student counseling services.

You can also check out guides on how student loan interest works and how to choose the right repayment plan. The sooner you learn how to manage your student loans properly, the easier it’ll be to pay them off later.

Interested in refinancing student loans?

Here are the top 6 lenders of 2018!
LenderVariable APREligible Degrees 
Check out the testimonials and our in-depth reviews!
1 Important Disclosures for Earnest.

Earnest Disclosures

To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.

Earnest fixed rate loan rates range from 3.89% APR (with Auto Pay) to 5.87% APR (with Auto Pay). Variable rate loan rates range from 2.47% APR (with Auto Pay) to 5.87% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of Month/Day/Year, and are subject to change based on market conditions and borrower eligibility.

Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.

The information provided on this page is updated as of 08/21/18. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit, email us at, or call 888-601-2801 for more information on ourstudent loan refinance product.

© 2018 Earnest LLC. All rights reserved. Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by or agencies of the United States of America.

2 Important Disclosures for Laurel Road.

Laurel Road Disclosures

Savings example: average savings calculated based on single loans refinanced from 9/2013 to 12/2017 where borrowers’ previous rates were disclosed. Assumes same loan terms for previous and refinanced loans, and payments made to maturity with no prepayments. Actual savings for individual loans vary based on loan balance, interest rates, and other factors.

Application detail: 5 minutes indicates typical time it takes to complete application with applicant information readily available. It does not include time taken to provide underwriting decision or funding of the loan.

Instant rates mean a delivery of personalized rates for those individuals who provide sufficient information to return a rate. For instant rates a soft credit pull will be conducted, which will not affect your credit score. To proceed with an application, a hard credit pull will be required, which may affect your credit score.

Total savings calculated by aggregating individual average savings across total borrower population from 9/2013 to 12/2017. Individual average savings calculation based on single loans refinanced from 9/2013 to 12/2017 where borrowers’ previous rates were provided. Assumes same loan terms for previous and refinanced loans, and payments made to maturity with no prepayments. Actual savings for individual loans vary based on loan balance, interest rates, and other factors.

3 Important Disclosures for SoFi.

SoFi Disclosures

  1. Student loan Refinance:Fixed rates from 3.899% APR to 7.804% APR (with AutoPay). Variable rates from 2.470% APR to 6.990% APR (with AutoPay). Interest rates on variable rate loans are capped at either 8.95% or 9.95% depending on term of loan. See APR examples and terms. Lowest variable rate of 2.470% APR assumes the current index rate derived from the 1-month LIBOR of 2.08% plus 0.64% margin minus 0.25% ACH discount. Not all borrowers receive the lowest rate. If approved for a loan, the fixed or variable interest rate offered will depend on your creditworthiness, and the term of the loan and other factors, and will be within the ranges of rates listed above. For the SoFi variable rate loan, the 1-month LIBOR index will adjust monthly and the loan payment will be re-amortized and may change monthly. APRs for variable rate loans may increase after origination if the LIBOR index increases. The SoFi 0.25% AutoPay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account. *To check the rates and terms you qualify for, SoFi conducts a soft credit inquiry. Unlike hard credit inquiries, soft credit inquiries (or soft credit pulls) do not impact your credit score. Soft credit inquiries allow SoFi to show you what rates and terms SoFi can offer you up front. After seeing your rates, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit inquiry. Hard credit inquiries (or hard credit pulls) are required for SoFi to be able to issue you a loan. In addition to requiring your explicit permission, these credit pulls may impact your credit score.
  2. Terms and Conditions Apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet SoFi’s underwriting requirements. Not all borrowers receive the lowest rate. To qualify for the lowest rate, you must have a responsible financial history and meet other conditions. If approved, your actual rate will be within the range of rates listed above and will depend on a variety of factors, including term of loan, a responsible financial history, years of experience, income and other factors. Rates and Terms are subject to change at anytime without notice and are subject to state restrictions. SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income Based Repayment or Income Contingent Repayment or PAYE. Licensed by the Department of Business Oversight under the California Financing Law License No. 6054612. SoFi loans are originated by SoFi Lending Corp., NMLS # 1121636. (

4 Important Disclosures for LendKey.

LendKey Disclosures

Refinancing via is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.

5 Important Disclosures for CommonBond.

CommonBond Disclosures

  1. Offered terms are subject to change. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900). The following table displays the estimated monthly payment, total interest, and Annual Percentage Rates (APR) for a $10,000 loan. The Annual Percentage Rate (APR) shown for each in-school loan product reflects the accruing interest, the effect of one-time capitalization of interest at the end of a deferment period, a 2% origination fee, and the applicable Repayment Plan. All loans are eligible for a 0.25% reduction in interest rate by agreeing to automatic payment withdrawals once in repayment, which is reflected in the interest rates and APRs displayed. Variable rates may increase after consummation. All variable rates are based on a 1-month LIBOR assumption of 2.08% effective July 25, 2018.

6 Important Disclosures for Citizens Bank.

Citizens Bank Disclosures

  1. Education Refinance Loan Rate DisclosureVariable rate, based on the one-month London Interbank Offered Rate (“LIBOR”) published in The Wall Street Journal on the twenty-fifth day, or the next business day, of the preceding calendar month. As of October 1, 2018, the one-month LIBOR rate is 2.22%. Variable interest rates range from 2.72%-8.32% (2.72%-8.32% APR) and will fluctuate over the term of the borrower’s loan with changes in the LIBOR rate, and will vary based on applicable terms, level of degree earned and presence of a cosigner. Fixed interest rates range from 3.75%-8.69% (3.75%-8.69% APR) based on applicable terms, level of degree earned and presence of a cosigner. Lowest rates shown require application with a cosigner, are for eligible, creditworthy applicants with a graduate level degree, require a 5-year repayment term and include our Loyalty discount and Automatic Payment discounts of 0.25 percentage points each, as outlined in the Loyalty and Automatic Payment Discount disclosures. The maximum variable rate on the Education Refinance Loan is the greater of 21.00% or Prime Rate plus 9.00%. Subject to additional terms and conditions, and rates are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change. Please note: Due to federal regulations, Citizens Bank is required to provide every potential borrower with disclosure information before they apply for a private student loan. The borrower will be presented with an Application Disclosure and an Approval Disclosure within the application process before they accept the terms and conditions of their loan.
  2. Federal Loan vs. Private Loan Benefits: Some federal student loans include unique benefits that the borrower may not receive with a private student loan, some of which we do not offer with the Education Refinance Loan. Borrowers should carefully review their current benefits, especially if they work in public service, are in the military, are currently on or considering income based repayment options or are concerned about a steady source of future income and would want to lower their payments at some time in the future. When the borrower refinances, they waive any current and potential future benefits of their federal loans and replace those with the benefits of the Education Refinance Loan. For more information about federal student loan benefits and federal loan consolidation, visit We also have several resources available to help the borrower make a decision at, including Should I Refinance My Student Loans? and our FAQs. Should I Refinance My Student Loans? includes a comparison of federal and private student loan benefits that we encourage the borrower to review.
  3. Citizens Bank Education Refinance Loan Eligibility: Eligible applicants may not be currently enrolled. Applicants with an Associate’s degree or with no degree must have made at least 12 qualifying payments after leaving school. Qualifying payments are the most recent on time and consecutive payments of principal and interest on the loans being refinanced. Primary borrowers must be a U.S. citizen, permanent resident or resident alien with a valid U.S. Social Security Number residing in the United States. Resident aliens must apply with a cosigner who is a U.S. citizen or permanent resident. The cosigner (if applicable) must be a U.S. citizen or permanent resident with a valid U.S. Social Security Number residing in the United States. For applicants who have not attained the age of majority in their state of residence, a cosigner will be required. Citizens Bank reserves the right to modify eligibility criteria at anytime. Interest rate ranges subject to change. Education Refinance Loans are subject to credit qualification, completion of a loan application/consumer credit agreement, verification of application information, certification of borrower’s student loan amount(s) and highest degree earned.
  4. Loyalty Discount Disclosure: The borrower will be eligible for a 0.25 percentage point interest rate reduction on their loan if the borrower or their co-signer (if applicable) has a qualifying account in existence with us at the time the borrower and their co-signer (if applicable) have submitted a completed application authorizing us to review their credit request for the loan. The following are qualifying accounts: any checking account, savings account, money market account, certificate of deposit, automobile loan, home equity loan, home equity line of credit, mortgage, credit card account, or other student loans owned by Citizens Bank, N.A. Please note, our checking and savings account options are only available in the following states: CT, DE, MA, MI, NH, NJ, NY, OH, PA, RI, and VT and some products may have an associated cost. This discount will be reflected in the interest rate disclosed in the Loan Approval Disclosure that will be provided to the borrower once the loan is approved. Limit of one Loyalty Discount per loan and discount will not be applied to prior loans. The Loyalty Discount will remain in effect for the life of the loan.
  5. Automatic Payment Discount Disclosure: Borrowers will be eligible to receive a 0.25 percentage point interest rate reduction on their student loans owned by Citizens Bank, N.A. during such time as payments are required to be made and our loan servicer is authorized to automatically deduct payments each month from any bank account the borrower designates. Discount is not available when payments are not due, such as during forbearance. If our loan servicer is unable to successfully withdraw the automatic deductions from the designated account three or more times within any 12-month period, the borrower will no longer be eligible for this discount.
  6. Co-signer Release: Borrowers may apply for co-signer release after making 36 consecutive on-time payments of principal and interest. For the purpose of the application for co-signer release, on-time payments are defined as payments received within 15 days of the due date. Interest only payments do not qualify. The borrower must meet certain credit and eligibility guidelines when applying for the co-signer release. Borrowers must complete an application for release and provide income verification documents as part of the review. Borrowers who use deferment or forbearance will need to make 36 consecutive on-time payments after reentering repayment to qualify for release. The borrower applying for co-signer release must be a U.S. citizen or permanent resident. If an application for co-signer release is denied, the borrower may not reapply for co-signer release until at least one year from the date the application for co-signer release was received. Terms and conditions apply.
  7. Estimated average savings amount is based on 14,659 Education Refinance Loan customers who saved on loans between August 1, 2017 and July 31, 2018. The calculation is derived by averaging monthly savings across Education Refinance Loan customers whose payment amounts decreased after refinancing, calculated by taking the monthly payment prior to refinancing minus the monthly payment after refinancing. We excluded monthly savings from customers that exceeded $4,375 and were lower than $20 to minimize risk of data error skewing the savings amounts. Savings will vary based on interest rates, balances and remaining repayment term of loans to be refinanced. Borrower’s overall repayment amount may be higher than the loans they are refinancing even if monthly payments are lower.

2.47% – 6.99%3Undergrad
& Graduate

Visit SoFi

2.47% – 5.87%1Undergrad
& Graduate

Visit Earnest

2.47% – 8.03%4Undergrad
& Graduate

Visit Lendkey

2.95% – 6.37%2Undergrad
& Graduate

Visit Laurel Road

2.48% – 6.25%5Undergrad
& Graduate

Visit CommonBond

2.72% – 8.32%6Undergrad
& Graduate

Visit Citizens

Our team at Student Loan Hero works hard to find and recommend products and services that we believe are of high quality. We sometimes earn a sales commission or advertising fee when recommending various products and services to you. Similar to when you are being sold any product or service, be sure to read the fine print to help you understand what you are buying. Be sure to consult with a licensed professional if you have any concerns. Student Loan Hero is not a lender or investment advisor. We are not involved in the loan approval or investment process, nor do we make credit or investment related decisions. The rates and terms listed on our website are estimates and are subject to change at any time.