The harsh reality is that the burdens of student debt are not shared equally. Students of color borrow more on average than other students seeking the same degree, and are two to three times more likely to default than their white counterparts. Furthermore, because they borrow more, students of color are disproportionately impacted by the negative effects of poor student loan servicing, which contribute to the racial wealth gap.
Beyond the financial barriers to equity in higher education, more generally, students of color are less likely to graduate with degrees than their white peers and are more likely to be pushed out of their schools due to safety concerns. These systemic problems require policymakers to come to the table to drive real change.
Fortunately, select leaders in Congress are acknowledging the issue and are researching ways to address it. Earlier this year, Senators Doug Jones, Elizabeth Warren, Kamala Harris, and Catherine Cortez Masto asked the Project on Predatory Student Lending and other experts to recommend legislative changes to address racial disparities in student debt, as well as the various challenges students of color face in college and career training programs. In partnership with the Lawyers’ Committee for Civil Rights Under Law, Mississippi Center for Justice, North Carolina Justice Center, and Southern Poverty Law Center, we recommended five areas where focused reforms could decrease racial inequality in higher education: (1) more oversight and accountability of for-profit colleges; (2) more data collection and transparency; (3) better oversight and management of loan servicers; (4) eliminate several specific barriers to student access and success; and (5) better protect student safety. Here is a brief summary of our recommendations.
1. Oversight and Accountability of For-Profit Colleges
For-profit colleges play an outsized role in generating and perpetuating disparate outcomes for students of color. People of color are significantly overrepresented in the for-profit college student population: although they account for less than one third of all college students, Black and Latino students represent nearly half of the students enrolled in proprietary colleges. In order to attract and enroll these students many for-profit colleges engage in unfair and deceptive practices, including deceptive advertisements and unrelenting recruiting, and leave students without the education and career development support they were promised. In order to combat these predatory for-profit colleges and protect students of color, we proposed:
- Codification of robust borrower defense protections
- Regulating spending on marketing and recruiting
- Strengthen the 90/10 rule
- Bolster the federal role in the regulatory triad
2. Data Collection and Transparency
The Department of Education’s current data on federal financial aid is limited. In order to make fully informed legislative decisions, more comprehensive data collection and rigorous analysis are necessary. We proposed:
- Codification of a gainful employment standard
- Study the student unit record ban to determine whether the department should track student loan defaults by race
3. Loan Servicing
Loan servicer misconduct comes in many forms, all of which harm borrowers. Student loan servicers commonly steer borrowers into payment plans that are cheaper for the servicer, and costly for the borrower. Additionally, vague communication, misapplied borrower payments, and other customer service misconduct cost borrowers dearly. Because Black students are more likely than other racial groups to borrow, and borrow more, for their education, the negative effects of poor student loan servicing are disproportionately damaging to student borrowers of color. To combat the harmful practices of loan servicers, we proposed:
- Simplification of federal student loan repayment and increased access to repayment information
- Statutory support for a Student Loan Borrowers’ Bill of Rights
- More specific requirements for communications and customer service
4. Student Access and Success
Students of color face many barriers in accessing and succeeding in higher education. College degrees have become even more necessary over time to achieve upward mobility and live a healthy economic life in the United States, but students of color lag behind their white counterparts in achieving associate degrees or higher. To increase access for students of color, we proposed:
- Removing the consideration of criminal background in the determination of eligibility for federal student aid
- Expanding opportunities for DREAMers to pursue higher education, and allow undocumented students to access federal student aid
- Increase resources and support to HBCUs, Tribal colleges and universities, Hispanic serving institutions, and Asian American and Native American Pacific Islander serving institutions
5. Student Safety and Rights
U.S. Department of Education data show that incidents of hate crimes on college campuses have been increasing over the years and target students of color. This type of crime pushes students of color out of school. To combat this problem, schools must proactively create safe spaces for students of color. To promote student safety, we proposed:
- Require schools to prevent campus sexual violence, appropriately investigate and respond to instances of sexual violence, and support survivors
- Require schools to protect students from hate crimes while ensuring First Amendment protections
To learn more about the Project on Predatory Student Lending’s work on racial justice, click here.