Black-White Differences in Student Loan Default Rates Among College Graduates

Abstract: Despite the financial benefits that college completion offers, student loan defaults are not uncommon among college graduates. Default rates differ markedly by race, with 30 percent of Black college graduates with federal student loans reporting having defaulted at least once compared to 10 percent of White graduates. This Economic Brief compares student loan borrowing, repayment and default behavior of Black and White college graduates. While the amounts that the two groups borrow are comparable, Black graduates are not only more likely to default but also more likely to be on income-based repayment plans. Ongoing research suggests that financial circumstances such as differences in earnings, wealth and credit terms contribute to Black-White differences in student loan default.

Keywords: Student loan default; race; earnings gap;

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Bibliographic Information

Provider: Federal Reserve Bank of Richmond

Part of Series: Richmond Fed Economic Brief

Publication Date: 2023-04

Volume: 23

Issue: 12