Why do Black borrowers carry more student loan debt on average?

Multiple systemic factors compound: the racial wealth gap means Black families have less savings to pay upfront, historically Black colleges and universities (HBCUs) receive less state funding per student, and Black students are more likely to attend graduate school to overcome labor market discrimination, adding to their balances. The Brookings Institution found that these structural gaps, not individual borrowing decisions, drive the disparity.

What is the default rate for student loans by race?

Black borrowers default at approximately five times the rate of white borrowers. According to Federal Reserve and Department of Education data, roughly 25% of Black borrowers default within 12 years of entering repayment, compared to about 5% of white borrowers. This gap persists even after controlling for degree completion.

How much do Hispanic students typically borrow for college?

Hispanic/Latino borrowers carry an average of $35,000 in student loan debt. About 67% of Hispanic students borrow to attend college. While this is lower than the Black borrower average, it still exceeds the white borrower average of $28,000, and repayment challenges are compounded by the wage gap after graduation.

Does income-driven repayment help close the racial debt gap?

Income-driven repayment (IDR) plans can lower monthly payments, but they do not close the gap because they extend repayment timelines and allow interest to capitalize. Black borrowers on IDR plans often see their balances grow, not shrink. The result is that IDR delays the problem rather than solving it for borrowers who earn less due to the racial wage gap.

What policy changes could reduce the racial student debt gap?

Researchers at Brookings and the Federal Reserve have proposed increased Pell Grant funding (which does not require repayment), targeted debt cancellation for borrowers who attended underfunded institutions, stronger regulation of for-profit colleges that disproportionately enroll students of color, and automatic income-driven repayment enrollment. Doubling the maximum Pell Grant alone would reduce Black borrowing by an estimated 30%.

Student Loan Debt by Race (2026)

Last updated: March 2026 · Sources: Federal Reserve SHED, Brookings Institution, NCES BPS

Black borrowers carry an average of $52,000 in student loan debt — nearly twice the $28,000 average for white borrowers.

The racial student debt gap is one of the most significant disparities in American higher education. It is not just about who borrows more; it is about who can pay it back. Four years after graduation, Black borrowers owe 12% more than their original balance while white borrowers have paid down roughly a third of theirs. These gaps compound across careers and generations.[^1]

The numbers on this page come from the Federal Reserve’s Survey of Household Economics and Decisionmaking (SHED), the National Center for Education Statistics (NCES), and the Brookings Institution’s analysis of Department of Education data.

Average Student Loan Debt by Race

Average cumulative balance among bachelor’s degree recipients

Race / Ethnicity	Avg Debt	% Who Borrow	Default Rate
Black	$52,000	86%	25%
Hispanic/Latino	$35,000	67%	13%
White	$28,000	66%	5%
Asian	$24,000	47%	4%

Sources: Federal Reserve SHED (2023); NCES Beginning Postsecondary Students Longitudinal Study; Brookings Institution (2023).

Average Student Loan Balance by Race

Average cumulative student loan debt

The Repayment Gap: 4 Years After Graduation

Borrowing the money is only half the story. The real gap shows up in repayment. A Brookings Institution analysis found that four years after completing a bachelor’s degree, Black graduates owed 12% more than their original loan balance. White graduates, by comparison, had paid down about a third of theirs.[^2]

This happens because of interest capitalization during deferment, lower average starting salaries due to the racial wage gap, and higher rates of graduate school enrollment (which pauses repayment while adding new debt).

Black borrowers

112% of original

Owe 12% MORE than original

Hispanic borrowers

83% of original

Paid down 17%

White borrowers

66% of original

Paid down 34%

Asian borrowers

59% of original

Paid down 41%

Default Rates by Race

Black borrowers default at roughly five times the rate of white borrowers. This disparity persists even when comparing borrowers who completed their degrees, which means it is not simply a completion issue. The Federal Reserve’s research attributes the gap to lower post-graduation earnings, higher debt loads, and less family wealth to fall back on during financial hardship.[^3]

Default has severe consequences: damaged credit, wage garnishment, seizure of tax refunds, and loss of eligibility for future federal student aid. These consequences disproportionately affect Black families and widen the racial wealth gap further.

Why 86% matters: 86% of Black students borrow federal loans to attend college, compared to 66% of white students. When you combine higher borrowing rates with larger balances and lower repayment success, the compounding effect on household wealth is enormous.

What Drives the Racial Student Debt Gap

The gap is not caused by any single factor. It is the result of multiple systemic issues compounding over time:

The racial wealth gap: The median white family holds roughly eight times the wealth of the median Black family (Federal Reserve Survey of Consumer Finances, 2022). Less family wealth means more borrowing for college.
Underfunded institutions: HBCUs and minority-serving institutions receive less state funding per student, which means higher tuition relative to resources and more borrowing for students.
Graduate school enrollment: Black students pursue graduate degrees at higher rates, partly to overcome labor market discrimination. Graduate borrowing has no federal cap (through Grad PLUS loans), adding $30,000–$100,000+ to balances.
The wage gap after graduation: Black college graduates earn roughly 80 cents for every dollar earned by white graduates in the same field, making repayment slower.
For-profit college targeting: For-profit institutions disproportionately enroll Black students and have the highest default rates of any sector.

Methodology

Average debt figures on this page come from the Federal Reserve’s Survey of Household Economics and Decisionmaking (SHED), which surveys a nationally representative sample of U.S. adults annually. Borrowing rates come from the NCES Beginning Postsecondary Students Longitudinal Study (BPS), which tracks cohorts of first-time college students over time.

Repayment trajectory data (the “4 years after graduation” figures) come from a Brookings Institution analysis of Department of Education administrative records. Default rates are approximate 12-year cumulative default rates from the same analysis.

We present rounded figures for clarity. The underlying distributions are wide: some Black borrowers owe far less than $52,000 and some white borrowers owe far more than $28,000. Averages describe group patterns, not individual situations.

We update this page when new SHED or BPS data is released, typically annually.

Frequently Asked Questions

Why do Black borrowers carry more student loan debt on average?: Multiple systemic factors compound: the racial wealth gap means Black families have less savings to pay upfront, historically Black colleges and universities (HBCUs) receive less state funding per student, and Black students are more likely to attend graduate school to overcome labor market discrimination, adding to their balances. The Brookings Institution found that these structural gaps, not individual borrowing decisions, drive the disparity.
What is the default rate for student loans by race?: Black borrowers default at approximately five times the rate of white borrowers. According to Federal Reserve and Department of Education data, roughly 25% of Black borrowers default within 12 years of entering repayment, compared to about 5% of white borrowers. This gap persists even after controlling for degree completion.
How much do Hispanic students typically borrow for college?: Hispanic/Latino borrowers carry an average of $35,000 in student loan debt. About 67% of Hispanic students borrow to attend college. While this is lower than the Black borrower average, it still exceeds the white borrower average of $28,000, and repayment challenges are compounded by the wage gap after graduation.
Does income-driven repayment help close the racial debt gap?: Income-driven repayment (IDR) plans can lower monthly payments, but they do not close the gap because they extend repayment timelines and allow interest to capitalize. Black borrowers on IDR plans often see their balances grow, not shrink. The result is that IDR delays the problem rather than solving it for borrowers who earn less due to the racial wage gap.
What policy changes could reduce the racial student debt gap?: Researchers at Brookings and the Federal Reserve have proposed increased Pell Grant funding (which does not require repayment), targeted debt cancellation for borrowers who attended underfunded institutions, stronger regulation of for-profit colleges that disproportionately enroll students of color, and automatic income-driven repayment enrollment. Doubling the maximum Pell Grant alone would reduce Black borrowing by an estimated 30%.

References

Board of Governors of the Federal Reserve System. (2023). Economic Well-Being of U.S. Households in 2022 (SHED). Federal Reserve Board. https://www.federalreserve.gov/publications/report-economic-well-being-us-households.htm
Scott-Clayton, J. (2018). The Looming Student Loan Default Crisis Is Worse Than We Thought. Brookings Institution. https://www.brookings.edu/research/the-looming-student-loan-default-crisis-is-worse-than-we-thought/
National Center for Education Statistics. (2023). Beginning Postsecondary Students Longitudinal Study (BPS). U.S. Department of Education. https://nces.ed.gov/surveys/bps/

Cite This Page

CollegeHelpGuide. (2026). Student loan debt by race (2026). CollegeHelpGuide.com. https://www.collegehelpguide.com/financial-aid/student-loan-debt-by-race/

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