Drop Out — or Drown in Debt? Many Black Students Face Stark Choices in Paying for College
This article was generated by Wisconsin Watch, a nonprofit and nonpartisan organization dedicated to investigative reporting. Their focus is on promoting government integrity and addressing quality of life issues in Wisconsin.
When Clint Myrick graduated from the University of Wisconsin-Milwaukee in 2010, he faced a substantial and overwhelming student loan debt in addition to his bachelor’s degree in music education.
Coming from a family with no prior experience of attending college, Myrick had little knowledge about financing his education. He expressed feeling unprepared and had to navigate the process of paying for college on his own.
To cover his expenses, Myrick worked various jobs throughout his time in college. From working at a flower shop to being a cashier at the UW-Milwaukee student union, he made about $6 per hour and relied on student loans to fund his education.
However, over the years, the burden of Myrick’s student loan debt has only grown. Despite making regular payments, his debt has reached a staggering $152,039 due to accumulating interest. To manage this debt, Myrick juggles multiple jobs, working as an Uber driver alongside his full-time position at a bank. He also serves as the president of the Milwaukee chapter of Alpha Phi Alpha, the Black fraternity he was a part of in college. This extra work takes up an additional 20 to 30 hours of his week.
Myrick’s experience is not unique. In Wisconsin, approximately 710,000 individuals owe a collective $24.4 billion in federal student loan debt. The median debt stands at $17,323 according to a 2020 task force led by Governor Tony Evers. The issue of crippling student debt has gained national attention, leading to calls for extensive loan forgiveness.
The analysis provided focuses on the comparison of median cumulative total federal student loans and the amount owed (including principal and interest) for white and Black students who entered college in 1995-96. The data reflects the financial burden faced by these borrowers after 20 years.
This disparity in student loan debt affects different groups unevenly. Research from EducationData.org reveals that Black and African-American college graduates carry an average student loan debt of approximately $25,000 more than their white counterparts. Additionally, four years after graduation, 48% of Black students owe roughly 12.5% more than their initial loan amount.
These discrepancies are especially evident in the Milwaukee area. A report from the Federal Reserve Bank of New York in 2019 highlighted the significant differences in student loan debt between majority-minority ZIP codes and majority-white ZIP codes. In Milwaukee, Waukesha, and West Allis, where the population is predominantly people of color, 23% of individuals have student loan debt compared to 19% in majority-white areas. The default rate for loans in these majority-minority ZIP codes is 21%, while in majority-white areas, it is only 6%.
Governor Evers’ task force proposed several measures to alleviate the burden of student debt in Wisconsin. These include expanding financial literacy education for K-12 students, increasing need-based financial aid, implementing loan forgiveness programs for graduates pursuing specific professions, introducing state tax credits, and establishing a mechanism for refinancing student debt to secure lower interest rates. The task force emphasized that addressing racial and ethnic disparities in student debt is crucial for finding effective solutions for Wisconsin’s borrowers.
For individuals seeking resources to manage their student loan debt, the Consumer Financial Protection Bureau offers a variety of tools and information. They provide an online tool to compare costs and financial aid options for prospective borrowers, and their student loan ombudsman handles disputes related to private student lenders or loan servicing and collection. Complaints can be submitted online.
The U.S. Department of Education also has a student loan ombudsman to handle disputes concerning federal student aid. Individuals can submit information about their issues online or contact the department at 877-557-2575.
The deep-rooted disparities in Milwaukee are well-documented. Numerous studies have identified Milwaukee as one of the most racially segregated metropolitan areas in the United States. This segregation contributes to structural inequality, making it more challenging for Black residents to improve their standard of living compared to their white counterparts. A 2020 report from the UW-Milwaukee Center for Economic Development highlighted the struggles faced by Milwaukee’s Black community. The report exposed the grim reality of income disparities and limited economic mobility, with many residents experiencing highly discriminatory conditions resulting from biased policies and practices in both government and the private sector.
Myrick asserts that these statistics demonstrate how racism hinders the overall well-being of the Black community.
"The underlying issue is racism. Racism is the driving force behind the disparities between Black people and white people," Myrick explains. "We do not receive equal education, resources, or facilities."
During a virtual debate on student loan forgiveness, Ashley Harrington from the Center for Responsible Lending highlights that Black students are disproportionately burdened by student loan debt. The nonprofit organization advocates for fair financial practices to protect homeownership and family wealth.
"The weight of student debt falls disproportionately on borrowers of color, particularly Black borrowers, who are more likely to take out loans, borrow higher amounts, and struggle with repayment," Harrington, the federal advocacy director, explains. "This is a direct result of centuries-long racially discriminatory policies and practices that persist to this day."
At UW-Milwaukee, the university where Myrick studied, many students are accumulating crippling amounts of debt from lenders.
According to the 2020 Integrated Postsecondary Education Data System (IPEDS), the percentage of UW-Milwaukee students taking out student loans in the 2018-19 academic year was 7 percentage points higher than the median of similar institutions. Additionally, UW-Milwaukee students borrowed an average of $7,499 per year, which is approximately $1,000 more than the median amount.
Myrick understands why so many students take out loans without fully comprehending how they will pay them back.
"They sell you the dream. ‘Just take out the loans, and you’ll find a job that allows you to repay them!’ You genuinely believe it," Myrick acknowledges.
Furthermore, higher levels of loan debt lead to higher rates of default.
Nationwide, only 45.9% of Black students complete a bachelor’s degree within six years, according to EducationData.org. At UW-Milwaukee, this figure drops to just 25% for Black and African-American students, as reported by the National Center of Education Statistics. This rate is approximately half the graduation rate of white students at UW-Milwaukee and is the lowest among all racial and ethnic groups at the university.
Victoria Pryor, the program manager for the Black Student Cultural Center at UW-Milwaukee, explains that this disparity is partly due to students being forced to leave school due to financial difficulties. She highlights the tough choices Black students face: either taking on more student loans or dropping out of school.
"I have witnessed several students who had to drop out because they lacked the final bit of tuition or experienced financial hardship," Pryor reveals. "They may obtain their degree but still be burdened with $40,000 to $50,000 in student loans. It’s disheartening to have such an enormous debt and still not have the degree."
Fenaba Addo, from UW-Madison, notes in a 2018 report for the Federal Reserve Bank of St. Louis that Black students take greater financial risks when pursuing higher education.
"(Black students) are more reliant on student loans compared to white students, have higher debt burdens, express more concerns about loan affordability, and are more likely to default," Addo, a faculty affiliate at the Institute for Research on Poverty, states.
To mitigate the risk of accumulating more loan debt, many UW-Milwaukee students seek assistance from the university’s financial aid office.
Increasing financial assistance has the potential to address disparities in loans, but Tim Opgenorth, the director of financial aid at UW-Milwaukee, has expressed concerns about the university’s limited funding to meet the need.
Opgenorth commented on the IPEDS data, stating that he was not surprised by the findings. He emphasized that the university is only able to offer a small amount of institutional, need-based aid to students. He acknowledged that there is acknowledgment on campus regarding the need to improve and endeavors have been made to raise funds to address the issue.
In an effort to bridge this gap, Pryor and the multicultural student success coordinators at UW-Milwaukee’s Black Student Cultural Center are focusing on providing academic, career, and personal resources to Black students and assisting them in finding financial aid opportunities. Pryor’s primary concern is that students minimize their debt upon graduating.
Pryor, an alumnus of UW-Milwaukee from 1988, observed that working part-time to cover college expenses was less common during her time as a student compared to the current situation. She emphasized the challenges and obstacles that today’s students face and stressed the importance of providing them with resources and a supportive environment to ensure their success.
Pryor and other members of the Black Student Cultural Center are advocating for the establishment of an emergency grant fund in collaboration with the university. They believe that increasing scholarship opportunities for students would help close the racial gap and enable students to focus on their studies without having to work multiple jobs or face the risk of dropping out. Additionally, the staff at the Black Student Cultural Center is actively engaging in outreach efforts to build relationships and trust with incoming students before the start of the semester, aiming to alleviate some of the challenges they may encounter.
The national discourse on addressing student loan debt has gained momentum since President Joe Biden assumed office. Biden’s plan to forgive up to $10,000 in student loan debt per person has been a topic of discussion with some questioning the extent of its impact. Senate Majority Leader Chuck Schumer and Senator Elizabeth Warren are among those advocating for $50,000 in loan forgiveness for the 43 million Americans who collectively owe over $1.5 trillion in student debt.
Schumer and Warren have highlighted the potential of canceling a greater amount of student loan debt to tackle disparities in debt and address the national racial wealth gap. Their resolution calling on President Biden to take executive action in canceling up to $50,000 in debt for federal student loan borrowers signifies their commitment to this cause. They anticipate that Richard Cordray, the new chief operating officer of Federal Student Aid, appointed by the Biden administration, will create more opportunities to alleviate student loan debt burdens nationwide. Warren, in particular, believes that Cordray’s experience and fearlessness in fighting for American families will benefit borrowers struggling with student loan debt and bring much-needed accountability to the federal student loan program.
However, critics argue against a blanket forgiveness of all student loan debt, expressing concerns that it would provide unnecessary relief to wealthy families. During an online debate, Nick Gillespie, the editor-at-large for Reason, emphasized the importance of wealthier individuals taking responsibility for repaying their loans. He cited that these individuals and their children, when they take out loans, should fulfill their financial obligations.
In summary, increasing financial assistance, establishing emergency grant funds, and advocating for more scholarships can help combat disparities in loan debt. The national conversation on student loan debt forgiveness continues to evolve, with varying perspectives on the extent of forgiveness and its potential impact on different socio-economic groups.
According to Harrington from the Center for Responsible Lending, eliminating all student loan debt can serve as an effective solution to address the racial disparities in debt and wealth.
Harrington emphasizes that canceling the debt would be a crucial step in rectifying racial inequities. By doing so, it would have a disproportionate impact on black and brown individuals, granting them the freedom to pursue other opportunities. This would significantly improve the financial standing of many families, taking them from negative wealth to positive wealth.
Meanwhile, individuals like Myrick continue to struggle under the weight of their six-figure loan debt. This burdensome debt has prevented Myrick’s family from qualifying for the best mortgage rates and has hindered their plans to invest in real estate.
Myrick believes that canceling all student debt would not only transform his own family’s life but also contribute to addressing the deep racial disparities prevalent in Milwaukee and the nation as a whole. Eliminating the debt would release many individuals, including himself, from the burden of debt, allowing them to lead more balanced lives, spend more time with their families, and pursue their dreams.
It is worth noting that this story was produced as part of an investigative reporting class at the University of Wisconsin-Madison School of Journalism and Mass Communication, led by Dee J. Hall, Wisconsin Watch’s managing editor, who also contributed to this story. Wisconsin Watch, a nonprofit organization, collaborates with WPR, PBS Wisconsin, other news outlets, and the UW-Madison School of Journalism and Mass Communication. The views and opinions expressed in works created, published, posted, or disseminated by Wisconsin Watch do not necessarily reflect those of UW-Madison or any of its affiliates.
This article was originally published on WisconsinWatch.org and is republished here under a Creative Commons license.
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