Education debt can drag down consumers of any background, but Black Americans are especially affected by their outstanding student loans, according to our survey of 1,550 borrowers.
Nearly half of Black borrowers regret borrowing in the first place, and it’s easy to see why: 4 in 10 survey respondents said their debt didn’t lead them to their desired career. And 7 in 10 said their repayment had delayed key financial milestones, such as saving for retirement.
To be sure, many of these issues affected borrowers from all groups, but the higher than average impact on Black students points to a disparity when it comes to the burdens of student loans.
On the bright side, while a majority of Black borrowers do feel loan-related mental and physical issues, they report lower numbers of stress than many of their other peers.
- Black borrowers are among the most likely to regret taking out student loans: 45% regret borrowing altogether, while 31% wish they had borrowed less. (Read more on student loan regrets)
- More than any other race or gender, 22% of Black females said their education debt was “completely unmanageable.” (Read more on student debt)
- Black Americans saddled with student loan debt are less likely to be in the career and role they desire than borrowers of other backgrounds. (Read more on career unhappiness)
- Student debt has also stopped Black borrowers from reaching other financial goals, including buying a home: 71% have put off such aims — that’s compared with 63% of white borrowers. (Read more on financial milestones)
- Although at least 60% of Black respondents reported physical and psychological symptoms of anxiety related to their finances, the proportion suffering in this way was slightly lower than those of other groups. (Read more on health effects)
Black borrowers aren’t just more likely to wish they had a student loan do-over. They’re also less likely to feel that everything went according to plan. In fact, just 24% of Black respondents said they have any student loan regrets, which is lower than the figures for fellow white, Asian and Hispanic borrowers.
Regret has led to a lack of borrower confidence. More than 1 in 5 Black women feel their education debt is “completely unmanageable,” and their male peers aren’t much better off.
Overall, about 1 in 6 Black borrowers said their student debt was completely unmanageable, and they were also the group least likely to rate their debt load as very manageable, with just 24% expressing this view.
Carrying a larger-than-average balance doesn’t help borrowers maintain a sense of control. Among respondents identifying as Black, the average education debt came in at $32,411 — almost 10% more than the $29,900 average for the Class of 2019 as a whole, according to our student loan debt statistics. Of course, borrowers of other racial backgrounds also leave school with large debt loads, most notably American Indians/Alaskan Natives ($52,172), Asian ($44,753) and white borrowers ($39,497).
|Our student loan coronavirus data snapshot echoes this finding …|
|About 1 in 4 Black borrowers (24.3%) carries a $50,000-plus balance. Far fewer borrowers identifying as Asian (9.7%), Hispanic (10.1%) and white (14.9%) owe at least $50,000 in education debt.|
At least some of these regrets among Black student loan borrowers may stem from a lack of guidance during the college financial aid process. Nearly a quarter (24%) of Black respondents said they weren’t given sufficient information about their options besides student loans — that’s slightly higher than the 21% average across respondents.
Learning about alternatives — such as state grants for college, work-study programs and private scholarships — is an important step in limiting the amount of student debt you take on. Unfortunately, information on these options isn’t always as available as it should be.
In a related finding, half of all Black student borrowers surveyed were first-generation college students — that is, the first member of their family to attend. Not having a parent or sibling who has been through the financial aid wringer would tend to make it harder to find alternatives to student debt.
While many of those who go to college begin their post-school life toiling in unfulfilling employment, Black students appeared more likely to suffer this fate. Just 29% of survey respondents identifying as Black said they worked in both the industry and role they sought after leaving college. By contrast, every other racial background polled 40% and above.
Similarly, 39% of Black student loan borrowers said they had yet to get a job in the field they wanted, compared with 32% of white borrowers, 30% of Hispanic borrowers and 16% of Asian borrowers.
On top of that, just 19% of Black borrowers reported feeling “almost always” happy at work, compared with the 23% of Hispanic borrowers and 24% of white borrowers who felt this way.
Not having a degree to show for their student loan borrowing could impede some Black borrowers from finding work in the target field or position they seek. Due to a host of challenges they face, Black students have reported the lowest graduation rates among their Hispanic, Asian and white peers, according to our 2018 study on the student debt burden on Black and Hispanic students.
One trouble with student debt is that it can sap your energy and take you away from other personal financial goals. Many Black student loan borrowers know this all too well, as just about 29% said their loans hadn’t impacted their goals, far fewer than the 37% among white borrowers, but closer to the roughly 24% of Hispanic and Latin respondents.
Overall, the most commonly delayed goal was buying a home — with nearly 41% of Black student loan borrowers reporting their debt getting in the way, compared with around 34% of their white classmates.
Retirement savings — perhaps the most crucial of the financial goals listed — was the next most likely to fall prey to student loan repayment priorities. Our survey found just 25% of Black respondents were satisfied with their level of retirement savings, the lowest rate among any of the other groups. Overall, 29% of those questioned felt their savings rate is adequate.
On average, the Black borrowers surveyed said they had socked away a little over $20,000 for retirement. This was lower than any other group surveyed and was about a fifth of the average retirement savings among white borrowers ($105,864).
|Speaking of saving for retirement struggles …|
|Nearly a third of recent college graduates (of any race) said their student loan payment had stopped them from saving for their post-career life, according to our July 2019 survey on student debt and personal mileposts.|
A lack of savings and other missed financial goals can, of course, lead to anxiety. And in fact, Student Loan Hero’s July 2020 survey of borrowers fending off the coronavirus showed that Black and Hispanic borrowers were more likely than others to be “extremely concerned” about their finances.
Black student loan borrowers struggle with physical, mental health
As far back as 2017, we’ve reported on the mental toll of student debt, with 61% of student loan borrowers surveyed saying they feared their situation was “spiraling out of control.”
Our latest survey results show that Black borrowers certainly aren’t immune: Nearly half (46%) said their education debt worry has affected their well-being. However, Black respondents did report being better off than peers of other backgrounds.
|Percent of borrowers, by race, who feel their loan-related worries are spiraling out of control:|
|● American Indian or Alaskan Native: 71%|
● Asian: 53%
● White: 51%
● Hispanic/Latino: 46%
● Black: 46%
That’s not to say that all is fine healthwise for Black borrowers, however. Nearly 20% of Black borrowers said they were losing sleep over their loans, even the rate was higher among Native American (55%) and white borrowers (28%).
Overall, Black borrowers have experienced the same sorts of serious physical (57%) and psychological (60%) symptoms of anxiety about their student debt, just as other borrowers do.
Because student loan debt can linger for years, even decades, it’s easy to see how despondency could set in. About 14% of Black borrowers we surveyed don’t think they’ll pay off their student debt, more than every racial group with a sizable sample in our survey.
“A few ways to cope with stressors are to plan for the future in small chunks,” Saleemah McNeil, a psychotherapist with education debt of her own, told Student Loan Hero.
“For example, putting things on a 30-day task list such as — look at your finances, figure out how much you can afford to pay and call student loan debt collectors,” McNeil said. “This helps to protect your mental health because you’re able to utilize positive coping skills to reduce anxiety.”
Although there are good sources of free loan repayment advice to help shorten repayment schedules, a sizable minority of Black borrowers lack access. In fact, more than every other racial group, 35% say they don’t have a trusted person or resource they can go to for guidance — that’s more than borrowers of all other races included in our survey.
|Other resources for student loan borrowers struggling with health effects|
|Fighting stress?||● Review our strategies for coping or ways to unwind|
● Follow in the footsteps of borrowers who’ve overcome such struggles
|Feeling down?||● Work your way through the 5 stages of student loan borrower grief|
● Call the National Alliance on Mental Illness hotline
|Still on campus?||● Take advantage of free resources for your health and wellness|
|Ready to act?||● Try our 5-step plan for taking back control of student loan debt|
Handling student loans (and other debt) as a Black American
Just as student loan repayment can hinder goals like saving for retirement, it can itself be hindered by other financial obligations. For example, about three-quarters of Black student borrowers also face monthly bills on credit cards and on personal and auto loans, among other dues.
Thankfully, there are tried-and-true approaches for handling multiple debt accounts at the same time. Borrowers, whatever their race or background, should start with these strategies:
- Budget expenses — and boost income: Cutting costs will only get borrowers so far. To truly pay down debt fast, it’s wise to spend more time focused on earnings.
- Prioritize higher-interest debt first: By paying off loans or credit with the highest rates first, you minimize the accrual of interest. On the other hand, borrowers who prefer smaller victories of zeroing lower-interest debt should compare the debt snowball and avalanche methods.
- Consider student loan remedies: About 55% of the Black student loan borrowers we queried had refinanced their debt to lower their interest rate or monthly payment. Borrowers should compare private refinancing with direct loan consolidation before choosing one route over the other. And do this only after first exhausting your search for student loan forgiveness and repayment assistance programs.
By taking steps like these, student loan borrowers can get right with their debt burden.