Individuals with student loans who are living in neighborhoods that are primarily made up of Black and Latinos are twice as likely to have their debt in collections as those living in neighborhoods that are primarily made up of white individuals, according to research that has been published by the New York City Department of Consumer and Worker Protection.
The report goes as far as to conclude that rather than being an equalizer among races, higher education “perpetuates the racial wealth gap” based on the amount of borrowing that students have to do. “If structural racial inequities are left unaddressed, Black borrowers in New York City, as in the rest of the country, will continue to struggle to repay debt, which will perpetuate higher default rates for Black borrowers, which will contribute indefinitely to the racial wealth, education quality, and wage gaps, and vice versa,” the authors write in their report.
With the exception of only two neighborhoods across the five boroughs of New York City, the neighborhoods with the highest amounts of student loans in collections are communities where the majority of residents are minorities, according to the report. Carrying more debt means individuals are less likely to be able to afford a mortgage or home purchase later in life and minorities tend to earn more than their white counterparts. Higher debt loans and lower earnings potentials are creating a significant roadblock for Black individuals, the report concludes, especially during the coronavirus pandemic.
“During this pandemic, we have seen Black Americans affected disproportionately – more than twice as likely to die than White Americans – but that is not where the inequality starts or stops. From the wealth gap to student loan debt, Black Americans have dealt with an unequal burden for a long time,” said DCWP Commissioner Lorelei Salas, in a statement. “Through our Office of Financial Empowerment, we are committed to finding solutions that help Black New Yorkers by offering financial counseling and educational resources and advocating for legislation and policies to address inequities.”