United States: The Epicenter of Student Debt
In the U.S., student debt is not just a financial burden; it's a societal albatross. With over $1.5 trillion in outstanding student loans, the U.S. leads the world in the sheer magnitude of student debt.
A large cadre of research now shows that student debt disproportionately burdens Black borrowers. Not only are Black students more likely to borrow, and to need to borrow more, but they struggle much more with paying back their loans.
Four years after graduation, black students owe an average of 188% more than white students borrowed. Black and African American student borrowers are the most likely to struggle financially due to student loan debt making monthly payments of $260.
Who has the most student loan debt by race? Black adults are more likely to have student loan debt than those in other racial or ethnic groups. They are more likely than white adults to hold student debt at every level of educational attainment.
Among student borrowers, women take out an average of $31,276, while men borrow an average of $29,270, according to a 2021 data analysis by the American Association of University Women. Black women owe a disproportionate amount of student debt.
Approximately three-quarters of Black- and White-headed families have debt, but the median debt-to-asset ratio is 50% higher among Black than White families (Copeland, 2020), with Black borrowers less likely to fully repay loans (Brevoort et al., 2021).
Higher percentages of Black (88 percent) and American Indian/Alaska Native (87 percent) students received grants than students who were of Two or more races (79 percent), White (74 percent), and Asian (66 percent).
Student loan debt
Young people are more likely to have student loan balances: 24.3% of millennials and 20.2% of Gen Z are in student debt, compared to 14.9% of Gen X, 6.1% of boomers and only 1.4% of the silent generation. But among those who have student loan debt, Gen X owes the most, on average.
Student loans are owned by the federal government or private institutions, depending on the type of student loan. Federal student loans are owned by the U.S. Department of Education while private student loans are owned by the financial institution that granted them.
64% of all student loan debt belongs to women. The average student debt for women in the U.S. is $31,726. Women have a median annual salary of $56,170 following college graduation, which is 26% of what men can expect to earn following graduation.
Whether your family is rich, poor, or somewhere in between, you can take advantage of student loans provided by the US government. These loans (known as Federal Loans, Direct Loans or Stafford Loans) offer lower rates and more flexible payback options than you can find from almost any other source.
Billionaire Robert F. Smith pledged to pay off student loans for every member of Morehouse College's graduating class. The Ivy League-educated business leader made his fortune investing in software firms and other tech companies.
The Gen X debt situation
The cohort also has the largest share of people with debt, nearly 99% carry some type of balance, LendingTree found. Gen Xers led the way in three of the four categories analyzed. The group — between 44 and 59 years old — has the highest median credit card, auto loan and student loan balances.
Inflation Forces Gen Z to Rack Up Debt
Younger workers, who earn less and have smaller savings, have turned to credit to bridge the gap. In fact, Gen Zers are racking up credit card debt faster than any generation.
But debt more than quadrupled in households headed by people aged 65 to 74 in that period (from $10,150 to $45,000 per household, on average), and for those 75 and up it has increased sevenfold (from just under $5,000 to $36,000).
The Gen Z debt situation
The youngest generation in the study has the lowest debt ($16,652) but the vast majority, 97%, still carry a balance. As far as student loans, Gen Zers owe significantly less than other generations, with a median balance of $12,172 — roughly half of what millennials owe for school.
Black Americans donated a higher percentage of their income to religious congregations and secular causes in 2018 than all other racial groups, except for White Americans. The main findings of this report are based on the Indiana University Lilly Family School of Philanthropy's Philanthropy Panel Study (PPS).
In 2022, the college enrollment rate for 18- to 24-year-olds was higher for those who were Asian (61 percent) than for those of all other racial/ethnic groups: White (41 percent) Two or more races (36 percent) Black (36 percent)
According to the Federal Reserve, white households held more than 80% of the nation's assets in 2022.
Black and Hispanic communities are more likely to have lower credit scores, income and homeownership than white people. However, there are economic resources available for underserved communities to help those affected by race create a healthy financial future.
Those with a Black householder made up 13.6% of all U.S. households but held only 4.7% of all wealth. And their median wealth ($24,520) was about one-tenth the median wealth of households with a White householder ($250,400). Wealth is the value of assets owned minus the value of debts owed.