Stalling Dreams

How Student Debt is Disrupting Life Chances
and Widening the Racial Wealth Gap

September 2019

 ABOUT IASP
The Institute on Assets and Social Policy (IASP), located at the Heller School for
Social Policy and Management at Brandeis University, works to improve our
understanding of inequality by examining how assets and asset-building
opportunities impact the well-being, financial security, and social and economic
mobility of individuals, families, and communities, particularly those left out of
America’s economic mainstream. In collaboration with our research partners,
constituency groups, and practitioner organizations, we use a racial equity lens to
explore the role that assets play in inequality and insecurity, and the structural
and institutional barriers to asset development.
AUTHORS
Laura Sullivan, Tatjana Meschede, Thomas Shapiro, and Fernanda Escobar
CONTACT
Institute on Assets and Social Policy (IASP), Heller School for Social Policy and
Management, Brandeis University
(781) 736-8685
iasp@brandeis.edu

@IASP_Heller

This work was supported by a generous grant from the Kellogg Foundation.

 “Twenty years after starting college, the median debt of White borrowing
students has been reduced by 94 percent—with almost half holding no student
debt—whereas Black borrowers at the median still owe 95 percent of their
cumulative borrowing total.”

Over one quarter of all
student loan borrowers
defaulted on their loans
within 20 years—about
half of all Black
borrowers and a third of
all Latino borrowers.

In their 30s, the typical
Black student loan
holder’s total wealth is
$10,700 in the red
compared to a close to
breakeven for Whites
with student debt.

Having ever held student
debt curtails wealth at
age 30 for everyone by
about $8,200,
independent of the value
of current student loan
debt.

Higher education has never been more important for
economic security, and yet, higher education has never been
so costly, burdening millions for decades. Today,
postsecondary credentials return historically high economic
and social premiums and are virtually required for entry into
the middle class, with lifetime earnings for a college
graduate about a million dollars greater than for a high
school diploma holder.1 Rising numbers of students of color
are obtaining college degrees on the promise of middle-class
security and are enlarging and diversifying the skilled
workforce in the U.S. 2 This expansion of college education
helps to fuel the economy and promises greater financial
stability for those with a college degree, but it comes at a
high price.
In the early 1960s university tuition averaged about $4,300;
today it’s closer to $15,500. 3 At public institutions, tuition
was even more affordable, averaging under $2,000 per year.
At that time, a student could work a minimum wage
summer job for 12 weeks and pay the average tuition bill.
Today, in sharp contrast, a student would need to work full
time for over 53 weeks at the federal minimum wage to pay
for the average tuition.4 Then, tuition amounted to 9% of a
typical family’s income; today it takes 25%. 5
Much has changed. Rising tuition. Stalled Pell Grants. New,
upgraded, and enhanced facilities and amenities competing
for U.S. and global students. And, crucially, the way higher
education is financed has changed from public support and
investment in our nation’s future to an individualized and
private financing regime, spawning a student loan industry
and resulting in huge and growing student debt burdens.

1

 The student loan system, designed to provide greater access to higher education and fill gaps in
students’ ability to pay, has turned into a debt sentence for more and more borrowers. It’s a
story blending some well-intended actors and policy, some nefarious and predatory financial
actors, for-profit education factories, and growth in education costs far exceeding inflation due
in large part to declining public investments. This report focuses on the consequences. What
changed trajectories is this system establishing for generations of young adults? How has this
changed the future for young people? What are the long-term effects of this burgeoning debt
crisis? What is its cascading impact on financial well-being, families, and society? How does it
affect young people differently by race and ethnicity? This report begins to take up these
critical questions. Any solutions must address these issues.
The current higher education financing regime sediments and exacerbates inequality, and
student loans adversely affect the Black-White racial wealth gap.6 Black students—and students
at for-profit universities, who are more likely to be students of color—often face the greatest
challenges as they try to finance their degrees with student loans. They take on more loans,
amass higher amounts of loans, and experience greater difficulty in paying off loans.7
Frequently without family financial wealth to support repayment and facing ongoing
discrimination in the labor market, 8 Black borrowers are much more likely to experience longterm financial insecurity due to student loans. Would anybody knowingly design a system
where, two decades after starting college, many Black borrowers still are paying on virtually all
of their student loans, while for the typical White borrower, a minimal debt burden remains?
Would anybody knowingly design a system whereby 38 elite colleges have more students who
come from families in the top 1 percent than students who come from the bottom 60 percent? 9
Elite colleges, to be sure, historically served upper-class White males, yet access gained by
women and students of color has created only a lukewarm diversity in the context of today’s
higher education financing regime.
This report highlights how student loans often create a long-term debt burden that blocks
wealth accumulation, rendering mobility more fragile and impeding long-term security,
particularly for young Black borrowers. While the crisis has grown nationally for all groups in
recent years, the data below underscore that Black students are particularly harmed by the
current student loan system. The role of higher education financing in contributing to the racial
wealth gap and its widening are detailed in this report.

2

 Skyrocketing Growth of Student Debt
Recent reports and policy proposals have sparked public awareness of how explosive growth in
student loans in recent decades has put a substantial financial burden on young people across
the country. A look at the details reveals dramatic trends. Today, student loans in the U.S. total
about $1.5 trillion dollars, making them the largest form of non-housing debt, exceeding credit
card debt and auto loans. 10 The number of students taking out loans, as well as the amount of
loans per student, have shot up as higher education has become less affordable. At the same
time, students get inadequate consumer protections as they take on loans—often their earliest
financial decisions as adults—and are steered in damaging directions by servicers 11 and even
schools. 12 13 Among college graduates the average student debt was $12,750 in 1996 and has
more than doubled to almost $30,000 just 20 years later.14 While crucial for understanding
overall trends, these devastating developments mask the racial dynamics in student loans that
are exacerbating disparities for people of color and creating barriers to mobility for those who
pursue higher education.

Greater Loan Amounts and Long-Term Debt Burdens for Black
Students
Black students are more likely than their White peers to take on student debt, to take larger
amounts of loans, and to have debt decades after pursuing higher education. 15 In a cohort of
students starting college in 1995-1996 and followed for 20 years, 43 percent of White students
did have to take any student loans compared to just a quarter of Black students. Among all
students, not just student loan holders, the median total for undergraduate loans for Black
students was 3.5 times greater than for their White peers and about 3 times more for total
federal loans overall including graduate loans.
The typical Black student borrower took out about $3,000 more in loans than their White peers;
yet 20 years after starting school, the typical Black borrower owed about $17,500 more than
their White peers (see Figure 1). In that time, nearly half of White borrowers were student
debt free (49 percent), while just a quarter of Black borrowers were able to pay off all of their
loans (26 percent).

3

 Figure 1: 20 years after starting college typical Black borrower still owes 95% of
debt, typical White student owes just 6%

BPS analysis of median cumulative total federal student loans for White and Black student loan borrowers who started college
in 1995-1996 and amount owed, including principal and interest, 20 years later. See appendix for additional information on
data source and sample.

Two decades after beginning their degrees, the median Black student borrower has $18,500 in
loans remaining, while the median White borrower holds just $1,000 in loans. In other words,
in 20 years, the median debt of White borrowing students has been reduced by 94 percent—
with almost half holding no student debt—whereas Black borrowers at the median still owe 95
percent of their cumulative borrowing total. This difference dramatically captures the
racialized impact of this higher education financing regime. While student loans once aimed to
improve economic trajectories of young people by expanding opportunity, for many,
particularly Black students, small debt burdens have been replaced by large debt loads that
anchor students in a position of economic jeopardy. Rather than serving as a springboard, the
loans serve as an anchor keeping young Black adults in an uncertain economic precarity.
Just as there are racial inequities in access to family wealth and resources in paying for college,
so too are these structural racial inequities built into the experiences of paying off student
4

 loans. Black college students have fewer family resources to turn to for loan payments, 16 are
more likely to support older relatives, 17 and face greater discrimination in the labor market 18,
making loan payments a greater barrier to financial security than for White students. These
factors mean that rather than getting continuing financial help after college from their
parents—as many of their White peers do— Black borrowers are more likely to be facing
student loan payments while also helping out family members. Beyond that, for-profit schools
heavily recruited students of color in recent years, and a disproportionate number of students
at for-profit schools are Black and Latino 19. Many of these students, misled by aggressive
marking tactics, leave without a degree and take on high levels of loans for programs that cost
considerably more than in public schools. 20 Thus, student loans, rather than opening doors,
frequently block upward mobility for economically vulnerable students of color for years,
leading to ongoing financial constraints and frequently default. The following section shows
that default is widespread among student borrowers, especially Black students.

Default Levels Reveal Systematic Failure of Student Loan
System, particularly for Students of Color
The student loan financing system is clearly failing our students when default is not an
aberration, but instead is a regular experience among student loan borrowers. Over one
quarter of borrowers who started college in 1995-1996 defaulted on their loans within 20 years
(26 percent). For Black borrowers, this percentage was almost half (49 percent), while about
one-third of Latino borrowers defaulted in this period (33 percent). Among first-generation
students, loans are clearly a substantial burden, with a third of borrowers whose parents have a
high school degree or less defaulting within two decades of starting college (32 percent) (see
Figure 2).

The student loan financing system is clearly failing our students when
default is not an aberration, but instead is a regular experience among
student loan borrowers.

5

 Figure 2. Default widespread especially among first-generation borrowers, with
half of Black borrowers not able to meet obligations

BPS analysis of percentage of student loan borrowers who started higher education in 1995-1996 who defaulted on student
loans within 20 years by race/ethnicity among all borrowers and first-generation borrowers. See appendix for additional
information on data source and sample.

While there is increasing understanding that student loans are a financial burden to young
people, these striking default rates confirm that the system overall is betraying our students.
The financial crisis spawned by student debt is beginning to dawn on policymakers, the media,
and the public. Insufficient attention, though, has focused on examining its disparate racial
impacts. Education is a public and moral good in itself. The way it is financed has created a
fragile foundation for borrowers’ well-being, career pathways, and financial lives. We now
explore some of the critically important long-term consequences of student debt on the
financial lives and racial disparities in wealth among young people.

6

 The Racial Wealth Gap and Student Loans for Borrowers in
their 30s
Advocates, researchers, a renewed reparations movement, and the 2020 Presidential cycle
have converged to move the consistent and growing racial wealth gap to the center of the
public agenda. Much insight, in our view, can be gained from understanding how today’s higher
education financing system contributes to and widens the racial wealth gap. Previous research
established the Black-White racial wealth gap for all households at approximately 10 cents on
the dollar (median of $171,000 for White households versus $17,600 for Black households) and
12 cents on the dollar for the Latino-White gap (Latino median household wealth estimated at
$20,700). 21 As a comparative reference point, the Black-White hourly income gap among men
registers about 70 cents on the dollar, and the gap is about 82 cents on the dollar for women:
substantial disparities, 22 but ones that are dwarfed by the wealth gap.
The racial wealth gap highlights the enormous variance in family resources between the typical
White household and the typical Black or Latino household. These resources can fund
significant economic mobility opportunities such as higher education—which ironically has
become a major contributor to the student loan disparities seen above. Thus, the current
individualized system for funding higher education builds on the foundation of our already
unequal society and exacerbates financial inequalities for students of color as they pursue their
degrees and for years afterwards.
Wealth inequalities dwarf the income inequalities among college graduates by race. Our
previous research reveals that the earnings gap of Black and White college graduates has been
narrowing over a 25-year period, while the already large wealth gap between these two groups
increased further. This data analysis confirms inheritance, parental contributions, and resources
flows in kinship networks as prime sources of disparities in loan outcomes by race. From this
solid starting point, we further investigate how student debt creates hugely different long-term
effects, particularly racially divergent wealth dynamics for Black and White borrowers.
In this section, looking at individuals who attended college and are now in their 30s, we find
that wealth among those who hold student loans is substantially lower than among those who
do not hold student loans. We find that student debt leaves the typical Black borrower in this
age group with substantial negative net worth—a harmful burden just as young adults are
attempting to establish their financial footing.23 White young adults without student loans
stand out as the most secure group, with wealth levels that reveal a security well beyond that
experienced by any current borrowers and all Black young adults regardless of borrower status
(see Figure 3). Latino young adults with and without current student loans also have
significantly lower wealth than White young adults without student loans, with median wealth
of approximately -$100 and $10,000 respectively. 24

7

 Figure 3. Whites in 30s without student debt have most wealth among those who
attended college

Analysis of median net worth of individuals 30-39 with at least some college, including AA and BA holders, excluding graduate
degree holders, from SIPP sample by whether respondent holds student debt. Wealth for White and Black individuals
significantly different by current student loan borrower status. Confidence intervals highlighted in grey graphic. See appendix
for additional information about data source and sample.

For young adults of color, who typically start out with little family wealth, the addition of
student debt to their portfolios can be crushing. Millions of young borrowers are in precarious
economic circumstances, with no financial cushion to turn to in times of need—let alone a nest
egg to establish financial security for future steps along the life course and towards retirement.
This reality, especially for Black borrowers, translates into denied and delayed opportunities for
creating financial stability, such as purchasing a home 25 or starting a new business. 26 Fifty-six
percent of first-time homebuyers found saving for a down payment difficult, citing student
loans as a barrier.27 White households, who have less need for student loans and greater family
resources to support loan payments, have a head start on the asset-building opportunities that
come with homeownership. The median White first-time home buyer is six years younger (age
32) than the typical first-time Black homebuyer, 28 advantaging Whites to begin amassing home
equity earlier in their life course, often with the help of family resources.29 These analyses
suggest that our current student loan financing system plays an important role in creating
cumulative disadvantage for young student loan borrowers of color and sedimenting racial
inequality into the next generation.

8

 Among the same sample of college goers, income differences—in contrast to wealth—by
borrower status are relatively small for Whites and not significant for Black and Latino
individuals, indicating no clear difference can be determined. This suggests that negative
wealth outcomes, not income outcomes, are the major financial consequence of student loans
for young adults in their 30s. In fact, race/ethnicity matters more than student debt holdings
for income outcomes for young adults in their 30s who attended college; Blacks and Latinos
have significantly lower income than their White peers, although borrower status does not
significantly affect income. Given clear evidence of ongoing discrimination in labor markets and
ongoing racial income gaps, this outcome is supported by a number of previous studies 30 and
represents an additional hurdle for young adults of color in creating financial stability. Still, as
noted above, income differences remain much smaller than wealth differences by
race/ethnicity. This is not, then, primarily a labor market story. It goes to legacy, institutions,
policy, kinship networks, race, and the experiences of different groups with access to wealthbuilding opportunities. Following the same students over time, the next section underscores
the lasting and detrimental impacts of student loans on wealth and the continuing importance
of race in shaping wealth outcomes for students with similar educational and student loan
experiences.

The Long Shadow of Student Debt on Young Adults’ Financial
Well-Being
Given the growth in student loan burdens among college students in the U.S., policymakers,
researchers, and the public are just beginning to understand the long-term impacts of student
loan debt on the financial well-being of young adults in this country. Using a unique,
longitudinal data set that allows us to control for parental income before college and income
and educational attainment into adulthood, we find that, for young adults in their thirties,
incomes among those who attended college are not significantly different for those who took
out student loans at any time during their higher education compared to those who never took
out loans.31 The story is quite different for wealth; any borrowing for college has significant,
negative impacts on net worth and home equity at age 30. This finding is independent of any
remaining student debt’s direct impact on wealth (i.e., excluding student loans from net worth
calculations32). Thus, student loans drag down or stall resource accumulation for young people
and lead to less wealth in the 30s. Borrowers must put resources towards living expenses and
debt payments rather than towards wealth-generating opportunities such as homeownership 33
and retirement savings through work 34— even as income levels are similar regardless of
experience with student loans.

9

 Figure 4. Wealth independent of student debt lowest for borrowers and Blacks at
age 30 among those who attended college

Analysis from the National Longitudinal Survey of Youth 1997 Cohort. Median regression analysis conducted using the value of
net worth at age 30, excluding the value of student debt in net worth calculations, as the dependent variable. Sample includes
only those with at least some college. Regression analysis controls for parental income in 1997, young adult income in 2015,
gender, and race/ethnicity. Analysis did not detect significantly different median wealth for Latino and Asian young adults
relative to their White peers controlling for other key demographic factors. See appendix for more detail on data source and
sample.

In addition to decreasing wealth more broadly, having held student loans is significantly
associated with $9,300 less in home equity at the median among young adult homeowners at
age 30. From impacts on wealth overall to home equity more specifically, student loans are
detrimental to the financial lives of young people, but the overall impacts must be understood
in the context of the racial and ethnic disparities in loan outcomes seen above and our
knowledge about the racial wealth gap. Figure 4 shows that even when controlling for origin
family income, adult income, and education level—as well as experience with student loans—
Black young people are expected to have almost $8,500 less in wealth apart from student debt
than their peers, creating a substantial barrier to paying off loans and building wealth for the
future. These racial disparities in wealth compound to make student loan debt an
insurmountable hurdle for many Black young adults. Clearly, as the data throughout this paper

10

 have shown, student loans can have negative and long-lasting repercussions that keep young
people from achieving security in adulthood, especially when they do not have access to
generations of family wealth. These burdens fall disproportionately on Black student loan
borrowers.
Not knowing all of the causal and agency sources for student debt should not stand in the way
of solutions and policy. It is clear that in the context of existing inequalities in wealth and assets
by race/ethnicity, the privatized system of higher education financing serves to further
exacerbate the racial wealth gap among young people. It has saddled young borrowers of color,
particularly Black borrowers, with debt that creates economic insecurity for decades and limits
new wealth-generating opportunities such as homeownership.

Moving Forward
Today’s student debt burden results from policy and institutional sources. An aligned
understanding of the problem and its consequences therefore must shift the interpretation of
the challenge and its public narrative—from personal responsibility to public policy, institutions,
and structures. Students and society cannot borrow their way to better jobs and pay. Rather,
reversing the current path to student debt burdens, which yoke young people to economic
fragility, requires its own public re-investment solution—a portfolio shift in public investment.
Higher education is an engine of economic growth, and an educated workforce is a public good
that benefits all. Yet the public commitment of our policymakers to higher education in recent
decades fails to acknowledge the public benefits associated with students enhancing their skills
through post-secondary education. Instead, our public investments in higher education have
diminished as political narratives about higher education have focused on individual gains. The
myopic focus on the benefits of higher education to individual students has led to a large-scale
retreat from public investments in higher education—leaving low-income and students of color
particularly susceptible to the rising costs of college and the financial burdens of student debt.
This has led, in turn, to a gaping class and race divide in security among college graduates,
particularly for Black young adults.
The damaging effects of student loans are unmistakable for today’s young adults overall, but
the impacts for students of color have been the most devastating, particularly among Black
borrowers. With half of Black borrowers defaulting on their student loans over 20 years and
typically holding almost $20,000 in student debt two decades after starting a degree, the
burden of student loans for Black young people is a crisis that requires immediate policy action.
The analyses in this report provide a window into why students of color have greater financial
need for loans for college and why those loan amounts accumulate, balloon, and create a drag
on mobility and financial well-being. With Black families holding a fraction of the wealth of the
typical White family, a regime of private and family financing is leaving a generation of young
borrowers of color with debt that serves as an encumbrance to long-term economic security

11

 and social mobility.
Policy solutions to reform our current education financing system are needed to help current
borrowers as well as future generations of students obtain higher education without being
weighed down by student debt. Any policy solution, in our strong view, must accomplish the
dual equity goal of canceling as much student debt as possible in a design that closes the racial
wealth gap. We need a racial equity filter for solutions to reverse the consequences of our
current privatized higher education financing regime. We need a return to strong public
investment in higher education that acknowledges the societal benefit of an educated public.
With student debt cancelation on the policy agenda for the 2020 presidential race, this is a
crucial moment in which significant progress could be made to reverse the damage of our
disinvestments in higher education. Such progress could uplift the drag of student loans on
today’s young adults and promote racial equity by reversing the particularly damaging effects of
our privatized education financing system on borrowers of color.

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 Appendix
Analyses for this paper utilize three major national surveys that provide information on the
student loan experiences and economic well-being of young adults. Each dataset provides
unique information that captures different factors and outcomes relating to student loans. For
this report, we incorporated complementary results from the three data sources in order to
provide insight into the long-term impacts of student loans for borrowers who today are in
their 30s. We chose to focus on individuals in their 30s because we wanted to test the longerterm impacts of student loans on young people’s financial outcomes, while also studying those
who had received their higher education relatively recently, such that they were impacted by
the increasing levels of borrowing and reductions in public funding that have occurred over the
last two decades. With trends towards increased borrowing and even higher tuition rates in
recent years, existing evidence suggests that younger cohorts may face even greater challenges
than the ones outlined in this study. The remainder of this appendix describes in further detail
data sources, samples, and analysis strategies utilized in the body of this report.

Beginning Postsecondary Students (BPS)
A survey of the National Center for Education Statistics (NCES), the Beginning Postsecondary
Students Longitudinal Study (BPS) surveys cohorts of first-time students at the end of their first
year of postsecondary education and then three and six years later. The analysis for this paper
utilizes data from the BPS: 96/2001 cohort that began higher education in the 1995-1996
academic year. Student interviews provide demographic and other data on the experiences of
students in higher education, while the 2015 Federal Student Aid Supplement provides
administrative data on student loan outcomes through 2015, providing unique insight into
experiences with borrowing over a 20-year time span after students began their postsecondary
studies. Typical (median) students in this cohort were 18 years old (average=21.6) when they
started college in 1995-1996 and thus were about 38 at the end of the 20-year follow up
period. This cohort of first-time students includes older students as well as those who started
immediately after high school, but 81 percent were 23 years of age or younger at the start of
the study. Analysis was conducted using the publicly available data from the NCES Datalab
available at: https://nces.ed.gov/datalab/.

Survey of Income and Program Participation (SIPP)
The Survey of Income and Program Participation (SIPP) provides comprehensive data on the
economic and social well-being of individuals in the United States. This data source provides
both student loan and wealth data at the individual level. We utilized the Wave 2 of the 2014
SIPP, which provides wealth and asset data for individuals in December 2014, to calculate
wealth outcomes of those with and without student loans, selecting for individuals ages 30-39.
We selected a final sample of individuals in their 30s who attended at least some college but
did not have graduate degrees (n=3349). Unlike the Survey of Consumer Finances (SCF),
another survey commonly used to study wealth and student loan debt, the SIPP allows for

13

 individual-level analysis allowing us to better understand specifically the relationships between
race/ethnicity, student loan debt, and wealth for individuals in their 30s, rather than
households. Data available on student loan debt in the SIPP provides information on current
debt held by the respondent, individually or jointly with a spouse.

National Longitudinal Survey of Youth (NLSY97)
The National Longitudinal Survey of Youth (NLSY97) is a longitudinal study that provides
nationally representative data on a cohort of young people who were born between 1980 and
1984. The initial sample of 8,984 were 12-16 years old at the time of the initial interview in
1997. The sample has been interviewed regularly in 17 rounds since 1997, and 80 percent of
the initial sample (7,103) was interviewed in the latest survey round. Young adults in the
sample were 30-36 years old at the time of the most recent interview, which was conducted in
2015-2016. Following the same participants over time, the NLSY97 was designed to capture
social and economic transitions from youth through adulthood and gathers information on
schooling, employment, family (including parents’ characteristics and family formation),
income, health, and other key life experiences. Due to the unique nature of this study, for this
analysis, we are able to incorporate into our analyses of wealth of young adults in their 30s the
impacts of origin family resources (i.e., parental income at start of the study in 1997) as well as
whether the young adult had ever taken out student loans, in addition to demographics like
race/ethnicity, sex, and current (2015) income. More information on the NLSY97 is available
online at: https://www.nlsinfo.org/content/cohorts/nlsy97.

Day, J. C., & Newburger, E. C. (2002). The Big Payoff: Educational Attainment and Synthetic Estimates of WorkLife Earnings. U.S. Census Bureau. Retrieved from: https://www.census.gov/prod/2002pubs/p23-210.pdf; U.S.
Social Security Administration. (2015). Education and Lifetime Earnings. Retrieved from:
https://www.ssa.gov/policy/docs/research-summaries/education-earnings.html.
2
From 2003-04 to 2013-14, the number of four-year college degrees awarded to Hispanic students more than
doubled (113 percent increase) and the number of degrees for Black and Asian/Pacific Islander students went up
46 and 43 percent respectively. For Whites, the increase was 19 percent. See: U.S. Department of Education.
(2017). Status and Trends in the Education of Racial and Ethnic Groups. Retrieved from:
https://nces.ed.gov/pubs2017/2017051.pdf.
3
Figures reported in constant 2016-2017 dollars. National Center for Education Statistics (NCES). (2017). Table
330.10. Average undergraduate tuition and fees and room and board rates charged for full-time students in
degree-granting postsecondary institutions, by level and control of institution: Selected years, 1963-64 through
2016-17. Retrieved from: https://nces.ed.gov/programs/digest/d17/tables/dt17_330.10.asp.
4
Today’s average tuition is $15,512 and federal minimum wage is $7.25. In the 1963-1964 school year, average
tuition at 4-year schools was $553 in current year dollars ($4,348 in 2016 dollars) and minimum wage was $1.25.
Ibid; Department of Labor. (n.d.). History of Federal Minimum Wage Rates Under the Fair Labor Standards Act,
1938-2009. Retrieved from: https://www.dol.gov/whd/minwage/chart.htm.
1

14

 Authors’ calculations from data from the National Center for Education Statistics (NCES) and the U.S. Census
Bureau. Median family income in 1963 was $6200 compared to $553 for average tuition at a 4-year schools in
current year dollars. Median family income was $61,372 in 2017 compared to $15,512 for tuition in 2016-2017.
Retrieved from: https://nces.ed.gov/programs/digest/d17/tables/dt17_330.10.asp;
https://www.census.gov/library/publications/1964/demo/p60-042.html; and
https://www.census.gov/library/publications/2018/demo/p60-263.html.
6
Kakar, V., Daniels, G. E., & Petrovska, O. (forthcoming). Does student loan debt contribute to racial wealth gaps?
A decomposition analysis. Journal of Consumer Affairs. Retrieved from:
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3094076.
7
Scott-Clayton, J. & Li, J. (2016). Black-White disparity in student loan debt more than triples after graduation.
Retrieved from: https://www.brookings.edu/wp-content/uploads/2016/10/es_20161020_scottclayton_evidence_speaks.pdf.; The Institute for College Access and Success. (2019). Quick Facts about Student
Debt. Retrieved from: https://ticas.org/sites/default/files/pub_files/qf_about_student_debt.pdf.
8
Quillian, L., et al. (2017). Meta-analysis of field experiments shows no change in racial discrimination in hiring
over time. Proceedings of the National Academy of Sciences of the United States of America, 114(41), 1087010875.
9
Chetty, R., et al. (2017). Mobility Report Cards: The Role of Colleges in Intergenerational Mobility. Retrieved from:
http://www.equality-of-opportunity.org/papers/coll_mrc_paper.pdf.
10
Federal Reserve Bank of New York. (2019). Household Debt and Credit Report (Q1 2019). Retrieved:
https://www.newyorkfed.org/microeconomics/hhdc.html.; Federal Reserve Bank of St. Louis. (2019). Student
Loans Owned and Securitized, Outstanding. Retrieved from: https://fred.stlouisfed.org/series/SLOAS#0. Estimates
range depending on data source. These two commonly cited sources estimate aggregate student loan totals at
$1.5 and $1.6 trillion respectively.
11
Consumer Financial Protection Bureau (CFPB). (2017). CFPB Sues Nation’s Largest Student Loan Company
Navient for Failing Borrowers at Every Stage of Repayment. Retrieved from:
https://www.consumerfinance.gov/about-us/newsroom/cfpb-sues-nations-largest-student-loan-companynavient-failing-borrowers-every-stage-repayment/.
12
Government Accountability Office (GAO). (2018). Actions Needed to Improve Oversight of Schools’ Default
Rates. Retrieved from: https://www.gao.gov/products/GAO-18-163.
13
The Trump administration has rolled back a number of protections for borrowers. For more information, see:
Joint Economic Committee Democrats, U.S. Senate. (2018). Consumer Corner: Trump Administration Continues
Anti-Education Agenda. Retrieved from:
https://www.jec.senate.gov/public/index.cfm/democrats/2018/8/consumer-corner-trump-administrationcontinues-anti-education-agenda.
14
TICAS. (2019).
15
All data from this section from authors’ calculations of Beginning Postsecondary Students (BPS) survey, BPS
96/2001 cohort. See appendix for more detail on survey and sample specifics.
16
Shapiro, T. (2004). The hidden cost of being African-American: How wealth perpetuates inequality. New York, NY:
Oxford University Press.
17
Taylor, J., & Meschede, T. (2018). Inherited prospects: The importance of financial transfers for White and Black
college-educated households’ wealth trajectories. American Journal of Economics and Sociology, 77(3-4), 10491076.
18
Wilson, V. (2015). Black unemployment is significantly higher than White unemployment regardless of
educational attainment. Economic Policy Institute (EPI). Retrieved from: https://www.epi.org/publication/Blackunemployment-educational-attainment/.
19
Huelsman, M. (2015). The debt divide: The racial and class bias behind the ‘new normal’ of student borrowing.
Demos. Retrieved from: http://www.demos.org/sites/default/files/publications/MarkDebt%20divide%20Final%20(SF).pdf.; Smith, P. & Parrish, L. (2014). Do students of color profit from for-profit
college? Poor outcomes and high debt hamper attendees’ futures. Center for Responsible Lending. Retrieved from:
https://www.responsiblelending.org/student-loans/research-policy/CRL-For-Profit-Univ-FINAL.pdf.
20
U.S. Senate Health, Education, Labor, and Pensions Committee. (2012). For-profit higher education: The failure
to safeguard the federal investment and ensure student success. Retrieved from:
https://www.help.senate.gov/imo/media/for_profit_report/PartI-PartIII-SelectedAppendixes.pdf?.
5

15

 U.S. Federal Reserve. (2017). Recent trends in wealth-holding by race and ethnicity: Evidence from the Survey of
Consumer Finances. Retrieved from: https://www.federalreserve.gov/econres/notes/feds-notes/recent-trends-inwealth-holding-by-race-and-ethnicity-evidence-from-the-survey-of-consumer-finances-20170927.htm.
22
Federal Reserve Bank of San Francisco. (2017). Disappointing facts about the black-white wage gap. Retrieved
from: https://www.frbsf.org/economic-research/publications/economic-letter/2017/september/disappointingfacts-about-black-white-wage-gap/. See also: Pew Research Center. (2016). Racial, gender wage gaps persist in U.S.
despite some progress. Retrieved from: https://www.pewresearch.org/fact-tank/2016/07/01/racial-gender-wagegaps-persist-in-u-s-despite-some-progress/.
23
All data results in this section from authors’ analysis of Survey of Income and Program Participation (SIPP) 2014
Panel, Wave 2. See appendix for more detail.
24
Results for Latinos not reported in Figure 3 as no significant differences were detected by student debt status,
most likely due to the small sample size. Still, point estimates and confidence intervals show substantially and
significantly lower wealth among Latinos with and without loans relative to Whites without loans. Observation
numbers for Asian-American young adults were not sufficient to generate conclusive findings.
25
Mezza, A., Ringo, D., & Sommer, K. (2019). Can student loan debt explain low homeownership rates for young
adults? Consumer and Community Context, 1(1), 2-14. Retrieved from:
https://www.federalreserve.gov/publications/files/consumer-community-context-201901.pdf.
26
Ambrose, B. W., Cordell, L., & Ma, S. (2015). Working paper no. 15-26: The impact of student loan debt on small
business formation. Federal Reserve Bank of Philadelphia. Retrieved from: https://www.philadelphiafed.org//media/research-and-data/publications/working-papers/2015/wp15-26.pdf.
27
National Association of REALTORS. (2018). 2018 Profile of Home Buyers and Sellers. Retrieved from:
https://nationalmortgageprofessional.com/sites/default/files/NAR_HBS_2018_10_29_18.pdf.
28
Analyses of American Housing Survey (AHS). (2017).
29
Killewald, A., & Bryan, B. (2018). Falling behind: The role of inter- and intragenerational processes in widening
racial and ethnic wealth gaps through early and middle adulthood. Social Forces, 97(2): 705-40.
30
For example, see: Gould, E. (2019). State of Working America: Wages 2018. Economic Policy Institute. Retrieved
from: https://www.epi.org/files/pdf/161043.pdf.; Chetty, R., Hendren, N., Jones, M., & Porter, S. R. (2018). Race
and economic opportunity in the United States: An intergenerational perspective. Retrieved from:
http://www.equality-of-opportunity.org/assets/documents/race_paper.pdf; Quillian, L., et al. (2017).
31
Data results in this section from authors’ calculations of National Longitudinal Survey of Youth (NLSY) 1997
Cohort. See appendix for more detail about analyses and dataset.
32
For these analyses, we added the absolute value of student loans to the net worth value of young adults at age
30 to isolate impacts on wealth separate from the direct negative impacts that student debt would have when the
debt values are included in net worth calculations.
33
National Association of REALTORS (2018). 2018 Profile of Home Buyers and Sellers. Retrieved from:
https://nationalmortgageprofessional.com/sites/default/files/NAR_HBS_2018_10_29_18.pdf.
34
TIAA & MIT AgeLab. (2019). Repay now or save for later. Retrieved from: https://tiaa.new-mediarelease.com/mit-agelab/downloads/TIAA-MIT_Issue_Brief_1_072619.pdf.
21

16

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THE HELLER SCHOOL
FOR SOCIAL POLICY
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Institute on Assets
and Social Policy