A new report offers sobering statistics on the financial outcomes for black college graduates and students, but starkly contrasts recently released data from the US Department of Education on cumulative default rates for historically black colleges and universities.
In an analysis compiled by the Center for American Progress, 78 percent of African American students entering college during the 2003-04 cohort financed their education with some form of federal loan, but made virtually no progress in paying down the loan in the years following graduation or leaving the school. With interest, the median average of debt owed by black students is 113 percent of the original borrowed amount, compared to 65 percent from white and 83 percent of Hispanic borrowers over the same period.
Black student borrowers also outpace the average default percentage of all loan holders by 20 percent.
While the individual numbers are staggering, the numbers on institutions which have enrolled former students who go onto default on loans continues to favor HBCUs. The Department of Education last month announced that 100 percent of black colleges were beneath the federal three-year standard of 30 percent of loan holders defaulting on repayment, and would not be blocked from enrolled students receiving financial aid. From the release:
HBCUs have deployed innovative approaches towards default management and reduction. Such strategies include implementation of a default management plan that engages stakeholders, identifies approaches to reducing default rates, and tracks measurable goals. These schools have increased borrower awareness of obligations through incorporating borrower topics at orientation sessions and providing enhanced entrance and exit counseling. Other best practices include borrower tracking, increased contact with delinquent borrowers, taking advantage of the cohort default rate challenge/adjustment/appeal processes, and partnering with other stakeholders to optimize default prevention, resolution, and reduction.
HBCUs have held a 100 percent compliance rate for the past two years, but experts say that the federal government must do more to create remedies for significant disparities which are clearly delineated by race.
“These results show that the U.S. Department of Education cannot ignore the interaction of race and student loans,” wrote Ben Miller, senior director of postsecondary education for the Center for American Progress.