By Scott Jaschik

Nov. 2, 2022

Student debt is a problem that affects people of all races in the United States.

But inA Dream Defaulted: The Student Loan Crisis Among Black Borrowers (Harvard Education Press), Jason N. Houle and Fenaba R. Addo argue that the student loan industry is not one that operates for everyone. Black students “are disadvantaged in two opposing phases of the process: debt accumulation and debt repayment,” they write. Houle is an associate professor of sociology at Dartmouth College,and Addo is an associate professor of public policy at the University of North Carolina at Chapel Hill. They responded to questions about their book via email.

Q: Some people say “debt is debt” and that race doesn’t play a major role in debt. What would you say in response?

A: So, we are not sure who these “some people” are … so we’d want to know more about who is arguing that race doesn’t matter to better answer this question. But we would say it’s indisputable that race matters for student loan debt in the United States, and that it matters more than most any other social factor you could think of. The data bear that out in pretty much every data set we could leverage on this issue. Racial disparities in debt are huge when people leave college, and they only get bigger in the years that follow. Racial disparities in debt repayment—difficulties with repayment, or default—are massive across all sectors (two-year/four-year/public/private).

In fact, in a review of the literature, Jacob Gross, Nick Hillman and other scholars have shown that race explains nearly as much variation in default rates as does college completion. So, race matters a great deal, and we can’t just chalk up these racial disparities in loan outcomes to issues related to college choice or college completion. For example, we know, in the aggregate, that four-year college graduates have very low default rates. But when you break it down by race, you see a very different story. Twelve years after graduating from a four-year college, 4 percent of white borrowers have defaulted. Meanwhile, about one in five (20 percent) of Black four-year college graduates have defaulted on their loans. There’s a clear racial divide here in terms of debt accumulation, debt repayment and the consequences that student loans have on the well-being of borrowers.

More broadly, there are other ways that “debt is debt” argument falls apart. Debt is what economist sociologists call “relational”—you have a contract between the lender and the debtor (and here we could look to how Black students are discriminated against in loan markets, which would also undermine any claim that “debt is debt”). But debt is also tied to all sorts of relationships—the relationships between you and your family as you decide how you’re going to pay for college, for example, or even the relationship between you and your romantic partner as you navigate debt repayment. So, debt is profoundly social. And if we ask questions like: Why are some folks taking on so much [more] debt than others? Why are some people having difficulty paying down debt while others are not? Why is debt so stressful, so consuming and so much a millstone that weighs down some folks but not others? What we find is that, for some, taking on debt is an opportunity, and for others, it’s a profound risk. And, we argue in the book, these differences are deeply tied to race.

But we’d also add this: it’s not just that race matters. It’s that anti-Black racism matters. Why are Black students saddled with more debt, have more difficulty repaying that debt, and why is college working better for white students than it is for Black students? We can’t answer these questions without recognizing that student debt both reflects and produces existing racial inequalities that are rooted in historic processes of social exclusion, and that Black students and their families are required to navigate institutions that were not built for them.