Proponents of higher education have always touted it as “the great equalizer,” to quote Ghanaian diplomat and Nobel Peace Prize winner Kofi Atta Annan. And while college may indeed present a path to a high-paying job, healthcare benefits, and respect among peers, the ever-increasing cost of tuition at public two-year and four-year universities, private colleges, and for-profit institutions has made it all-but-impossible for most Americans to graduate without incurring student debt.

According to the United States Federal Reserve, U.S. students now owe $1.6 trillion in student loan debt, making it second only to mortgage debt. Unfortunately, this debt burden disproportionately impacts minority students, many of whom do not have access to family wealth, lack adequate school and family resources to help with federal aid applications, and/or cannot find a job with compensation adequate to cover the loan repayments when they do graduate. A 2016 analysis from the Consumer Financial Protection Bureau (CFPB) found that more than 90 percent of African American and 72 percent of Latinx students take out loans to attend college, compared to 66 percent of their white counterparts who do the same. A further study by the Center for Responsible Lending found that the average white student owes around $30,000 in student debt, while the average Black student owes closer to $34,000; this contrast is exacerbated by the Black-white wage gap, which allows white borrowers to pay down their debt at a rate of 10 percent per year, but sees Black borrowers pay down only 4 percent per year.

Student loan debt can result in a “financial domino effect,” and this especially true for students of color. Because of the black-white pay gap, minority students are more likely to experience delinquency or default, and this, in turn, may lead to lower credit scores and higher interest rates for future loans.  Furthermore, banks may be unwilling to lend to minorities—either for a mortgage loan or small business loan—because their debt-to-income ratio is too great. For many minority students, the “great equalizer” of higher education acts, instead, as a limiting force on their potential, rendering them hamstrung by debt for decades.

While the student loan debt problem is complex and daunting, two solutions to this problem come to mind: First, we need to provide minority students with access to scholarships and funding, thus alleviating them of burden of debt repayment; Second, we need to increase access to capital, so students with debt are able to start businesses, buy homes, and build generational wealth without relying on banks and venture capitalists to green-light their hopes and dreams.

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