Study Finds Racial Disparities in Student Loan Defaults and Repayment Patterns

According to a new report from Pew Charitable Trusts, Black and Hispanic student loan borrowers are significantly more likely than their White peers to default on their loans and experience challenges in keeping up with their repayment plans. For their report, the authors surveyed a sample of student loan borrowers who received undergraduate loans from 1998 to 2018. They also reviewed several prior academic studies on racial differences in student loan debt to better understand the factors contributing to disparities in repayment patterns. Over the past two decades, 50 percent of Black and 40 percent of Hispanic student loan borrowers have experienced a loan default, compared to 29 percent of their White counterparts. Among borrowers who have defaulted, three-quarters of Black and Hispanic borrowers did so multiple times, compared to 56 percent of White borrowers. These racial disparities in student loan challenges may be a result of historic financial difficulties affecting Black and Hispanic communities. For example, Black borrowers are more likely to have a negative net worth, while Hispanic borrowers are more likely to live in a state with an above-average cost of living. Both groups are more likely than their White peers to have lower household incomes, unstable...