A coalition of public-interest groups is urging the U.S. Department of Education to begin monitoring stark racial disparities when it comes to student lending.
In a letter written to Education Secretary John B. King Jr., the National Consumer Law Center, along with 40 other civil rights, legal-aid and public-interest groups, requested that the government begin collecting data “to ensure that the federal student loan program is a tool that helps students of color, rather than holding them back.”
Millions of Americans apply for student loans each year, but it’s African-Americans and Latinos who take on most of the education debt.
“For nearly a decade, the Department of Education has known that student debt impacts borrowers of color differently than white borrowers,” the letter reads. “Yet in that decade, the Department has failed to take sufficient steps to ameliorate the disproportionately negative impact on borrowers of color, or to even conduct further research to discover the causes or the extent of disparities.”
The Washington Post reports that education officials don’t collect data on the race or ethnicity of borrowers. However, information concerning racial disparities in student lending and which groups in particular struggle with student loans is documented every few years through surveys by the Federal Reserve or the U.S. Census Bureau.
Of the 43 million Americans who take out a combined total of $1.3 trillion in student loans, African-Americans at all income levels are more likely to shoulder student loan debt. According to the Washington Post, Black Americans also have the least amount of resources to weather the risks that come with borrowing money.
Latino students don’t fare much better, which is why both racial groups are disproportionately falling behind on their student loan payments, a study by the Washington Center of Equitable Growth reports. The goal is to ultimately reduce the rate of defaults and delinquencies on loans for students of color. But advocacy groups admit it might take extra time and targeted outreach efforts to pull that off.
“If we’re seeing a disparity on default rates, it’s worth asking that question of whether it’s doing that job adequately and whether the tools we use to collect are appropriate,” said director of the student-loan, borrower-assistance project Persis Yu. “[And] if we are imposing these really harsh consequences (for defaulting), we should know what impact it’s having to different communities.”
According to a joint study by Demos and the Institute for Assets and Social Policy at Brandeis University, 54 percent of African-Americans aged 25 to 40 have student loans while just 39 percent of their white peers have them. Advocacy groups in the coalition said studies like these are helpful, but the Department of Education has better access to data provided by government contractors who service and collect payments on student loans.
“Because the Department uses different servicers and collection contractors, it should take advantage of the opportunity to test and compare the outcomes of borrowers of color by contractor,” the NCLC letter reads. “Studying borrower outcomes by race and by contractor may illuminate which servicer and collector practices exacerbate and which ameliorate racial disparities, and thus light a path for improvements.”
“It is time for the Department to leverage its tremendous resources and ensure that student loan policies work for all borrowers,” it concludes.
The letter’s signatories include the American Civil Liberties Union, the Center for Responsible Lending, Consumer Action and Veterans Education Success, among others.
According to the Washington Post, Department of Education spokeswoman Kelly Leon is expected to respond to the coalition’s letter.