A review of Education Department data reveals that African-American student loan borrowers are in crisis, the Center for American Progress reports.
The data show that 49 percent of all Black students who borrowed for their undergraduate education defaulted on their federal student loan. African American students who earned a bachelor’s degree also had a high default rate—25 percent of Black graduates compared to 9 percent of all other borrowers.
This stunning analysis is based on students who started college in the 2003-04 academic year. The median African-American borrower from that group owes more on their federal student loans—12 years later—than they originally borrowed. Today, they now owe 113 percent of their original debt.
African-American borrowers face structural disadvantages, according to the Center for American Progress. Black students have greater financial needs to pay for higher education because the median African-American household has just $1,700 of wealth. Moreover, Black graduates are seeking employment in a job market that continues to discriminate against them.
“Perhaps it’s too much to expect student loans and postsecondary education to solve these structural problems, but sending African-American students into an inequitable adulthood with large debts from college can put them even further behind than they already start,” the organization said.
Here are five ways to help manage student loan debt:
1.CNN Money recommends making prepayments on unsubsidized loans, which accrue interest while in school unlike federals student loans.
2.While money may be tight, make every effort to pay more than minimum required payments whenever possible, Business Insider suggests.
3.Avoid taking on unnecessary additional debt, says Forbes. Don’t compound the challenges of high student loan debt with payments for a new car or using high-interest rate credit cards.
4.It’s a great idea to pay down the principal early rather than making only interest payments, according to CNN Money.
5.Business Insider also recommends taking advantage of discounts. For example, some lenders offer discounts for setting up automatic deductions.