As the new school year gets underway, here are some troubling facts about student debt: minority and low-income students are borrowing at higher rates to attend college, and they're more likely to become indebted dropouts than their white and wealthier peers.
That's according to a recent report on college student borrowing by race and income from Demos, a progressive public policy organization. The research comes as the issues of college affordability and student debt emerge as hot campaign topics in the 2016 presidential race.
"While college is commonly regarded as a key tool to move up the economic ladder, we have created a system based almost entirely on acquiring debt to get ahead, with no regard to how it would impact different communities," report author and Demos senior policy analyst Mark Huelsman said in a statement. "This system is essentially pushing students of color and low-income students even farther down the ladder, adding an additional level of risk that previous generations did not take on when paying for college, and saddling them with additional disadvantages as they enter the workforce."
Huelsman's analysis of academic literature, U.S. Department of Education surveys and the Federal Reserve's 2013 Survey of Consumer Finances showed that 81 percent of black bachelor's degree recipients graduated from public institutions with student debt in 2012, the latest year for available data.
By comparison, the figure was 63 percent for both white and Latino graduates.
At private, non-profit schools, 72 percent of white, 86 percent of black and 87 percent of Latino graduates had borrowed to obtain a bachelor's degree in 2012.
Low-income college students receiving Pell Grants are also more likely to take on debt for a bachelor's degree than their higher-income counterparts, according to the research.
Eighty-four percent of Pell Grant recipients graduated with a bachelor's degree from public institutions with debt in 2012, compared to 46 percent of non-Pell Grant recipients. At private, non-profit schools, 91 percent of students getting Pell Grant assistance had borrowed to receive a bachelor's degree in 2012, compared with 60 percent of non-Pell Grant recipients.
Black and Latino students also have the highest borrowing rates among those graduating with associate's degrees from public institutions, the research showed.
Dropout rates among student borrowers varied along racial and economic lines as well.
Thirty-nine percent of black student borrowers drop out of college, compared to 31 percent of Latinos and 21 percent of whites, according to the most current data cited in the report from 2009. The college dropout rates for low-income and high-income borrowers were 38 percent and 23 percent, respectively.
At for-profit schools, the droput rates among student borrowers stood at 67 percent for Latinos, 65 percent for blacks and 46 percent for whites.
Out of all higher education institutions, students at for-profit colleges face the highest debt burdens and dropout rates, the research found.
"While for-profit schools graduate the lowest percentage of their students than any sector, those who do graduate almost certainly take on debt," the report reads. "Eighty-six percent of white students, 89 percent of Latino students, and 90 percent of black students borrow to receive a bachelor's degree at for-profit institutions, with debt averaging around $40,000 for each group. Ninety-six percent of Pell Grant recipients who graduate from for-profits incur debt."
Here are other key findings from the research:
Graduates with student loan debt report lower levels of job satisfaction when initially entering the workforce. High debt borrow[er]s report levels of satisfaction around 11 percentage points lower than those who graduated from college debt-free.
Average debt levels are beyond borrowing thresholds that are deemed by research to be 'positive.' Studies suggest that small amounts of debt--$10,000 or below--have a positive impact on college persistence and graduation, but amounts above that may have a negative impact. Unfortunately, average debt levels for both associate's and bachelor's recipients are now well beyond the 'beneficial' threshold.
While those with a college degree are more likely to save or buy a home, student debt could be acting as a barrier. At every level of education, households without student debt are more likely to own homes, have slightly lower interest rates on mortgages, and have retirement and liquid assets that are considerably larger than those households with student debt.
Demos' report details several suggestions to help achieve debt-free college, an idea embraced by several Congressional Democrats and Democratic presidential candidates, including Hilary Clinton and former Maryland Gov. Martin O'Malley. U.S. Sen. Bernie Sanders (I-VT), another candidate vying for the Democratic presidential nomination, is pushing a free-tutition plan that's further to the left of the higher education proposals backed by Clinton and O'Malley.