Students from poor families are struggling way more to pay back their student loans
By Jillian Berman
Student loans are helping to widen the gap between rich and poor in some cases
In theory, student loans are supposed to increase economic mobility by providing low-income students with money they wouldn't otherwise have to attend college. But a new report suggests the loans may be helping to widen the gaps between the haves and have-nots.
Some highlights from the report:
In 2015, students from poorer families were struggling much more to pay back their debts than their wealthier counterparts, according to a report published Thursday (https://nces.ed.gov/pubs2018/2018410_loan_repayment_firstlook.pdf) by the National Center for Education Statistics. Students from the poorest quartile of families who started school in the 2003-2004 academic year still owed 91% of the debt they borrowed 12 years after entering school on average. Students from the wealthiest families owed 59%, the report found.
In the past, rich and poor students struggled to pay back their debts at close to the same rate. Borrowers who took out federal student loans during the 1995 to 1996 academic year were paying them back at almost the same rate -- regardless of their family income when they entered school, By 2007, or 12 years after they originally took out the loans, students from the richest 25% of families still owed about 72% of their debt on average, while students from the poorest families still owed about 77%.
That widening gap in outcomes between rich and poor students is "distressing," said Ben Miller, the senior director of postsecondary education at the Center for American Progress, a left-leaning think tank. "If you believe that higher ed should be able to help equalize income gaps, to see these big differences by entering family income is pretty interesting," he said.
Why are some students falling behind in debt repayments?