The Structural Racism of Student Loan Debt

Student loan delinquency rate by zip code. Darker colors indicate higher delinquency rate.
Student loan delinquency rate by zip code. Darker colors indicate higher rates. (Click for more detail.)

by James A. Bacon

Americans now owe $1.3 trillion in student loan debt, exceeding the amount they owe on credit cards ($700 billion) or automobile loans ($1 trillion). Unlike other forms of debt, student loans are disproportionately concentrated among young people. Further, student loans are uniquely onerous because the debt cannot be discharged in bankruptcy proceedings. In the past two decades or so, America has created a new indebted class — I call it the indentured servant class — where none existed before.

After decades of advocating the expansion of federal lending programs on the grounds that everyone who wants to attend college should be able to, America’s progressives are waking up to the idea that maybe the massive accumulation of debt is not such a good thing. Indeed, the student debt issue has become a major presidential campaign theme for the first time in American history with Bernie Sanders and Hillary Clinton vying to outbid the other with proposals for loan forgiveness, free college and the like. Progressives wouldn’t be progressives, of course, without turning massive student indebtedness, which they aided and abetted for so long, into a racial issue. Student loans, you see, constitute “structural racism.”

After an extensive analysis of the data, Marshall Steinbaum and Kavya Vaghul with the Washington Center for Equitable Growth have concluded that minority populations disproportionately suffer from high delinquency and that middle-class minorities seem to be the most adversely affected. “We believe that these two facts reflect the impact of structural racism in the U.S. higher education system, credit and labor markets, and distribution of wealth.”

Actually, I have observed previously that the piling on of student debt represents a form of “structural racism.” But rather than blaming credit and labor markets, I indict the U.S. system of higher education exclusively. One of the most proudly progressive institutions in the country is also one of the most racist — assuming we define racism the same way that progressives do, which is by the disparate impact institutional arrangements have on the poor and minorities.

Steinbaum and Vaghul have performed a useful service in building a map of student debt (from which the image above was taken). They analyzed each zip code in the country by median household income, racial composition, and student loan debt delinquency. (You can see the interactive map here.) Not surprisingly, they found strong correlations between household income, race and default rates.

Unfortunately, they superimposed upon the data their own progressive framework for analysis, citing discrimination in credit markets (minorities get less generous credit terms) and labor markets (minorities are less likely to get job offers) as important reasons for the higher default rates. Those are interesting claims, which may or may not be true — a good topic for a different blog post — but I think it’s fair to say that the most important factor explaining the higher default rate by minorities is the college completion gap.

The authors do acknowledge the reality of this gap:

African Americans and Latinos are, on average, less likely than white students to complete college once they start. According to the National Center for Education Statistics, in 2013 roughly 57 percent of recent African American high school graduates and 60 percent of recent Latino high school graduates were enrolled in college compared to 69 percent of white students. Yet the National Center for Education Statistics reports that for the 2005 starting cohort of college students, about 21 percent of African Americans and 29 percent of Hispanics complete a four-year institution within four years compared to a four-year completion rate of 42 percent for white students.

This is fundamental. The longer it takes to graduate, the more debt a student accumulates. Moreover, if a student fails to graduate and acquire the credential it takes to succeed in the job market, their debt is all the more difficult to pay off. All other factors pale in comparison.

So, the real question we should be asking is this: Why are blacks and Hispanics dropping out of college at higher rates than whites, and why do they take longer to complete their degrees? Are they less prepared academically on average than whites and Asians, perhaps because of the inadequate quality of their K-12 education? Do they take more remedial courses in college? Do they struggle with higher-level courses? Do they fail more courses? Do they get more discouraged and wonder what the hell they’re doing?

Rather than blaming credit markets and labor markets, perhaps we should take a closer look at the policies of America’s colleges and universities. To what extent, in their pursuit of diversity, do they admit minorities with lower SAT scores than the student average? If minorities do have lower SAT scores, do the colleges provide them additional support it takes to keep up — remedial classes, tutoring, mentoring, whatever — or do they let the students fend for themselves?

Here in Virginia, the University of Virginia stands out for the negligible difference in graduation rates between blacks and whites. Clearly, although UVa aggressively recruits minorities, it either (a) succeeds in recruiting minorities who are equally qualified academically, (b) provides the necessary support for those who aren’t as qualified, or (c) accomplishes some combination of the two.

If UVa is the gold standard for minority retention (not just recruitment), we should ask, how do other Virginia colleges and universities, both public and private, compare? Colleges recruiting minorities and congratulating themselves on their diverse enrollment, but then allowing minority students to struggle, drop out and accumulate massive, unpayable debt are guilty of what I call institutional racism. Such behavior is a stain that no amount of good intentions can wash away.

(Hat tip: Larry Gross)

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15 responses to “The Structural Racism of Student Loan Debt”

  1. LarrytheG Avatar

    where to start?

    first – I think approaching this in terms of identity ethnicity is a disserve.

    What if instead – we characterized in terms of family income and family education levels – perhaps even including grandparents… education and income.

    then we start to focus on things we can change without the racial and ethnicity baggage and get to the real issues – and actually have a chance to get to real solutions.

    I am no fan of all-you-can eat college loans for any and all…

    it’s begging for fiscal disaster … not only taxpayers but in the real lives of people who end up being real victims …

    we have to stop unfettered and unrestricted college loans.

    we actually have to do something about how we do GI education benefits.

    but clucking our collective tongues about ethnicity and race ain’t going to solve anything.

  2. Hill City Jim Avatar
    Hill City Jim

    Many don’t want to hear this but it is in the genes. We are all different in looks, abilities and smarts.

  3. Blackbird Fly Avatar
    Blackbird Fly

    Hill City Jim,

    Cool it with the eugenics, this is not a racial supremacy site; in fact such comments should be scarcely tolerated by Bacon. The comment has no value, even if such a phenomenon were the case we’d still need to move forward with efforts to improve the outcomes, in those groups and across the board.


    UVA is entrenched with many advantages in this cross-sectional analysis; take into account that UVA currently has a student body eligible for Pell Grants at a very similar rate as the Ivies. With all due respect , I imagine UVA offers a tremendous wealth of resources for all of its students (frankly I wish I grew up in Va. and could have aspired to attend a university like UVA), but it should not be the metric by which we compare other, dissimilar, schools to. We should look for examples of resources offered at schools that accept a student body which includes many students from impoverished backgrounds, yet still have relatively high retention/4-year graduation rates. I venture that there is where the true answers would be.

    1. Blackbird, you may be right about UVa. If I had the time, I’d love to find out exactly what UVa does to help minority students succeed, and whether it can be replicated. Interestingly, VCU has done a good job in recent years of improving the retention rates of blacks (although not to the same level as UVa). That would be worth a look as well.

  4. Les Schreiber Avatar
    Les Schreiber

    Back in the day when junior colleges were first established,one of the ideas was that all students would spend the first two years at a JC and then spend the last 2 at a major university. Maybe some model based on this concept could be introduced.

    1. Les, I’m pretty sure that’s the way it works today. If you complete two years at community college, you can waltz into UVa, W&M or any public university of your choice. I’m surprised more people don’t do it.

      That’s another story — why don’t more people do it?

  5. LarrytheG Avatar

    not gonna change UVA. Probably not going to do much about the college loan deal at least anytime soon.

    And no matter what HCJ feels about genes and race – the goal for taxpayers should be to do what we must to ensure that enough of us get enough education – to get a job, pay our taxes, care for our families, and not need entitlements no matter what flavor of human being you come in nor your rating on the “gene” scale.

    we can do Community College in Va – we can do degrees in nursing, dental techs, imaging, auto, LE, EMs, trades, etc…

    we want folks to get jobs… even if they are not and never will be Einsteins.

    why we seem to feel the need to justify a lifetime of entitlements for others to “prove” they are not “up to snuff” gene-wise is beyond me.

    1. Hill City Jim, the critical role of genes in effecting intelligence is beyond dispute to the scientific community. Only Neanderthal science haters on the left refuse to believe what has become “settled science.”

      On the other hand, the relationship between genes, race and intelligence is much cloudier. I know about the “Bell Curve” — I read the book — but I’m not fully convinced. The reason is that Darwinian pressures of natural selection should work in favor of intelligence in all races and ethnicities. There is no selective advantage to being stupid.

      But it gets complicated. If “smart” genes were universally advantageous, they should drive out the “stupid” genes over many generations. Clearly, they haven’t. Geneticists also tell us that the offspring of the smartest people show a “regression to the norm” — towards middling intelligence. If the stupid genes survive, they must be linked to some positive attribute of which we are unaware. Likewise, the smart genes may confer smartness at the expense of some other useful characteristic. I don’t think we understand these issues very well, and I’m uncomfortable making generalizations about the link between race, genes and intelligence.

      When it comes to public policy, even the genes-affect-intelligence people agree that “the environment” explains some 25% to 50% of the variation in intelligence. That’s where our focus should be — helping everyone achieve their natural potential.

  6. While it’s true that there is more discussion now about student loan debt, a great economic crippler, why is that none of the public voices talk about cost? The reason that there is too much debt is that the cost of higher ed is too high. And without wading into a race quagmire, it’s certainly true that the disadvantaged encounter only more disadvantages along the path to a diploma, free and clear. The challenges mount.

    Note that this map counts delinquency, not debt level.

    1. Lift, you’re absolutely right. The underlying driver of the whole problem is the runaway costs and increasing unaffordability of higher education. Granting bigger student loans only subsidizes the trend. Sanders’ idea to make college tuition free would accelerate it. Instead of bankrupting poor kids, he would bankrupt the country.

      1. Whenever I hear someone complain that the Affordable Care Act insurance or other private insurance is too expensive, I always point out that it’s the cost of health care that is too high. ACA failed to include promised measures of cost controls, and as you point out, higher ed has felt little pressure to manage its budgeting. The focus seems to shift to who pays/how to pay rather why pay so much.

  7. Hill City Jim Avatar
    Hill City Jim


    As a reader of the Bell Curve, possibly you have read works by his co-author, Charles Murray not limited to, but of notice is Coming Apart: The State of White America 1960-2010.
    Mr. Murray with a lot of data, states his argument is centered on a notion of self-selective sorting that began in the 1960s and 1970s, when he argues that cognitive ability became the essential predictor of professional and financial success, and people overwhelmingly began marrying others in the same cognitive stratum and living in areas surrounded largely by others in that same stratum, leading to not only an exacerbation of existing economic divides, but an unprecedented sociocultural divide that had not existed before in America.

    Smart parents breed smart children, smart children do well in both school & life. It’s in their genes!

  8. LarrytheG Avatar

    there IS a link between genes and IQ and it is unquestionable in the basics but scientists – will also tell you that with humans environment also plays a huge role in one’s ability to use what innate intelligence they have – such that some of the worlds most extraordinary and successful people are not only not geniuses but quite modest in basic intelligence while at the same time some of the brightest people on the planet are extremely limited in what they can do at skills beyond thinking.

    For ANYONE to “think” that genes alone determine one’s ability to grow up and be a success and a significant contributor to others – is a reflection of them and that’s the God’s honest truth – backed up by a LOT of “settled” science.

    what’s on display in some comments here is ignorance, racism and really, hate. Abject ignorance.. a failure to be educated themselves.

    of all the problems we have as a society these days – some ,perhaps more than less of it is driven by ignorance, hate and our own unforced errors associated with such …. and really – those folks inability to deal with our own flaws – to recognize them and to work to overcome them.

    I trend back and forth in how I feel about those folks between pity and anger… and I admit – sometimes it bigger than I am and I have to reset to get back to a realization that this is sadly who we are and a disability just as real as a physical or mental defect many have to struggle with.

  9. Hill City Jim Avatar
    Hill City Jim

    “what’s on display in some comments here is ignorance”

    You’ve got that right!

    But certainly you know much more than the scientific community that attributes a much smaller percentage to the non-gene cognitive abilities.

    But keep up the race baiting!

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