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    For black students, a college degree means long-term debt

    11/18/2017 Brockton - Ma -Brandyy Fernandes (cq) has $80,000 in student loan debt for her own education. Jonathan Wiggs\Globe Staff Reporter:Topic.
    Jonathan Wiggs/Globe Staff
    Brandyy Fernandes has $80,000 in student loan debt for her own education.

    Jasmine Reyes’s college degree landed her a stable post-graduation job and opened up a wealth of learning opportunities, from an internship in Los Angeles to study abroad in the Netherlands.

    But for Reyes, 23, that Emerson College degree came at a sapping financial and emotional cost: a near-constant worry each semester about being able to afford the tuition, guilt over her grandmother’s decision to apply early for Social Security to help pay for her education, and ultimately, the burden of $40,000 in student loans.

    “There are a lot of people who think that because I’m African-American I got to go to college for free,” said Reyes, who graduated in 2016. “But I am in so much debt. I would still do it again. But it was extremely stressful.”

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    Recent research and data from the US Department of Education indicate that African-American students, like Reyes, are taking a greater financial risk than other groups in going to college, even as a degree has grown increasingly vital for workers hoping to survive in the modern economy. They typically start with a smaller economic cushion, are more likely to borrow, and, on average, earn less upon graduation.

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    As a result, instead of bridging the racial equity gap by opening the prospect of well-paying jobs, getting a degree can actually widen the gulf in wealth between black and white adults.

    African-American students who started college in 2003-04 typically owed 113 percent of their student loan 12 years later, according to the most recent data from the US Department of Education analyzed by the Center for American Progress.

    By contrast, white borrowers had paid down their debt and owed only 65 percent of the original amount, and Hispanic borrowers had knocked down their debt to 83 percent of the initial loan.

    College costs have exploded for everyone, and as a result, the amount of student loan debt Americans are carrying has approached $1.4 trillion. Black students, though, are more likely to take out federal loans to earn a degree, with nearly 80 percent going into debt to attend college, compared to 60 percent of students overall. Then they struggle to repay those loans, weighed down by increasing interest and default fees.

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    Limited family resources, a higher likelihood of dropping out of college, dampened earnings even with a degree, and a greater chance of attending predatory, for-profit institutions all contribute to the more burdensome experience of African-American student loan borrowers, experts say.

    The findings strike at the heart of the implicit promise made to young people, that a college degree is a ticket to economic mobility, helping students and their families build wealth and climb further than the previous generation.

    But for many black students, even those from wealthier families, attending college means taking on more loans than their white peers, pushing them further in the hole financially as they start their careers, said Fenaba Addo, a consumer science professor at the University of Wisconsin-Madison, who is studying the effects of student loan debt on African-Americans.

    “Black kids are taking a lot more risk in pursuing a college degree and may not be receiving the same rewards from the investment,” Addo said. “The question is: Why are these degrees not translating to upward mobility?”

    Boston-area organizations that help students struggling with college debt said they have noticed the racial gap between borrowers for years, and the new federal data just confirm their anecdotal sense.

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    To begin with, African-American families often have fewer financial resources, meaning that families may not have much in the way of savings accounts, stocks, or home equity that they can draw on to help defray the cost of college tuition. Nearly 20 percent of black families have zero or negative net worth, according to the Federal Reserve, compared to 9 percent of white families. The median net worth of white families is $171,000, nearly 10 times that of black families, according to the Fed.

    ‘Having less debt opens you to so much more freedom when you get out of college.’

    — Brandyy Fernandes, who took out $80,000 in loans 

    Reyes, who grew up in California, knew her parents wouldn’t be able to provide much help in paying her tuition, so she was thrilled when Emerson College, her first-choice school, offered her a scholarship that would cover half the tuition. But tuition increased over the years, and the scholarship covered less of the costs, forcing her mother to take out a loan, her grandmother to tap into her retirement funds, and Reyes to work two part-time jobs while going to school.

    She wrote letters and petitioned the college successfully for additional financial aid, but some of her African-American friends weren’t as fortunate and withdrew from school, Reyes said.

    “The only reason I got what I did, was that I pushed,” Reyes said.

    Students who leave college without a degree can end up worse off, saddled with student loans but without the credentials to get a job that will help pay them off, experts said.

    But even African-Americans with a bachelor’s degree can hit hurdles in the job market, making it more difficult to repay their student loans.

    Unemployment for black Americans at 7.5 percent is almost twice the rate it is for whites, and after the Great Recession of 2008 hit a high of 16.8 percent. The annual unemployment rate for blacks with at least a college degree was 3.7 percent in June, compared to 2.3 percent for whites with at least a college degree, according to data from the left-leaning Economic Policy Institute.

    In Boston, the median pay for black residents with a college degree is $45,000, far less than the $60,000 median for white graduates, according to data from a 2016 report by Boston’s Workforce Development Office.

    Allison, a single mother of three who lives in the western Boston suburbs and asked that her last name not be used to protect her privacy, said that after spending most of her young adulthood working in fast-food restaurants and warehouses, she decided to go to college. She went to MassBay Community College and then to Lesley University to earn her degree. She finished in 2013 with about $10,000 in debt.

    But even with her bachelor’s degree, Allison, 46, said she has had to work a full-time job and two part-time gigs on the weekends to earn the $65,000 she needs each year to pay her bills.

    “I was spending more time out of home, away from my kids,” she said. “When I was home, I was tired. I was catnapping here and there.”

    So she returned to school at Bridgewater State University to get her master’s degree in social work, in the hopes of finding a higher-paying position, with a leadership role. But there are fewer grants and scholarship options for graduate students, and by the time she finishes her program next May, she anticipates owing $70,000 in student loans.

    “I am disappointed that there aren’t more options,” she said.

    With less income, black borrowers are also three times more likely to default on their loans within four years than white borrowers, adding to the costs of their initial debt, according to the nonprofit Brookings Institution.

    The federal government does offer borrowers some relief for their student loans, including income-based repayment plans. That can reduce monthly payments, but also extend the life of the debt and increase overall interest payments.

    Still, black borrowers are sometimes reluctant to acknowledge that they are struggling and need assistance, until their loans default, experts said.

    “There’s a shame factor,” said Ce Cole Dillon, a Chicago-based author who has written a book about student loans. “They’re trapped in debt, but they’re college-educated, they’re the smartest person in the family, and the expectation was that they should have known better.”

    After taking out about $80,000 in loans for her undergraduate and graduate education, including some that went into default, Brandyy Fernandes, 43, of Brockton is hoping that her children will be able to avoid her mistakes.

    When her daughter returned home from college for Thanksgiving, Fernandes planned to help her set up her accounts so she could track her loans and set up payments a month ahead to build better financial habits.

    Fernandes, who works in college admissions, said she knows some black students are worried about going to college because of the cost and the debt. But a bachelor’s degree can still increase a black family’s net worth by six times, to about $68,000.

    Borrowers need a better understanding about college costs, how much they’ll earn with a particular degree, and how much is reasonable to borrow, Fernandes said.

    “Having less debt opens you to so much more freedom when you get out of college,” she said.

    Deirdre Fernandes can be reached at deirdre.fernandes@globe.com. Follow her on Twitter @fernandesglobe.