The Impact of the Student Debt Crisis On Black Women

Black women student debt crisis

For years, black women have carried a higher than average burden when it comes to student debt. This has been amplified by the fact that black women are graduating from college at higher rates than previous generations but have less financial means to fund their education primarily due to the racial wealth gap. You might be one of those women impacted by these financial statistics.

Every summer a fresh wave of black college women start a new phase of their lives. Many discover who they are, what their goals are, and what they want to do once they graduate.

It can be an exciting time because college promises the ability to start earning a consistent income after graduation, the potential for job security, and general upward mobility. However, this promise is not true for everyone.

As black women graduate, they are immediately thrown into different realities, as the majority of them are forced to reckon with student loans.

With the economy reeling from the impact of the recent pandemic and racial injustice at the forefront of many conversations, the student debt crisis and its impact on black women can not be ignored.

And there has never been a more critical time to address this. But first, let's go over what exactly this crisis is.

What is the student debt crisis?

As of today, American college students have racked up a staggering $1.4 trillion in debt. Many pay for their education using a combination of grants, scholarships, and help from family. However, the majority rely on debt.

Between 1997 and 2016, the median estimated federal student loan debt across the U.S. went from $3,640 to $30,000. And according to, by 2019, the average student loan debt per person was $31,172.

Based on these staggering numbers, the student debt crisis arises from the fact that many Americans are taking on high debt for college but are unable to pay off their student loans.

This is primarily due to the fact that average incomes have not risen at the same rate as college costs. In addition, borrowers also have other financial obligations outside of their student loans.

How the student debt crisis hurts black women the most

The national statistics on the student loan crisis and its effect on Americans showcase the depth of this issue. However, the impact of the student debt crisis on black women surpasses the standard American experience.

According to the American Association of University Women, on average, white men borrow $29,862 while black women borrow $37,558. In addition, they found that women hold 2/3 of America's nearly $1.5 trillion student loan debt, with black women carrying the highest student loan debt of any racial or ethnic group.

An estimated 86.8% of black students take out federal loans (at least 50% of whom are women) to attend 4-year colleges while for white students, that number drops to 59.9%.

The wage gap and poor job forecasts limit the ability of black women to pay off their debt

After graduating, the obligation to pay off student debt lingers. And this is where paths diverge notably.

According to a study published in 2019 by Demos, twelve years post-college, white men had paid off 44% of their student loan balance while white women had paid off 28%.

But black women?

Within the same 12-year timeframe they saw their loan balances actually increasing by 13% on average due to the interest compounding on their debt. For black men, their balances grew by 11% on average.

While many black women go on to successfully graduate and step into corporate America, they're confronted with a new challenge once they do; a gender wage gap that is much wider than average for people of color.

When it comes to wages, black women are paid 61 cents for every dollar earned by their white male counterparts. It may seem small but over a 40-year window, this results in black women earning about $946,000 less.

With limited income, black women tend to fall behind their peers in paying back loans and are subject to out-sized interest charges and longer repayment windows.

Needless to say, the ability of black women to achieve financial goals like homeownership and retirement is extremely difficult.

What black women can do to get ahead of their student loans

The high cost of student debt and the lack of real transparency when it comes to how student loans really work is a really important issue that needs to be addressed from a government policy perspective.

Today the lowest income students, predominantly from black communities,  are loaded with the most student loans. The government can act by increasing grants and scholarships for minority demographics.

This, however, is not just government responsibility. It also needs to be addressed from a corporate responsibility perspective especially as it relates to equal pay for women.

That being said, you can also take action. specifically by planning and committing to tackle your student debt. Here are some tips you can put into practice that can help in reducing your student debt.

1. Learn exactly how your student loans work

It's easy to assume that your loans will work themselves out once you graduate. But nothing could be further from the truth.

Student loans come with responsibilities. There are different types of loans and terms like amortization and capitalization that may feel foreign. The best way to navigate the student loan process successfully is to get a good understanding of exactly how the loans work.

What are the interest rates on them? What are the monthly payments? When are they due?

If you're not sure where to start on this topic, we've got you covered. You can read our article on detailed student loan advice. Also, check out our completely free 3-course bundle on how your student loans work. This course bundle will help you understand your loans as well as help you map out a solid plan to pay off your student debt.

2. Seek out scholarships if you are still in school

One truly amazing benefit of American education is the ability to access scholarship funding and in particular scholarships for black women. There is no other country in the world that gives as much financial aid as the U.S. Every year, thousands of dollars in untapped funding go to waste simply because no one is applying.

A few years ago, I was fortunate to find a scholarship program that supported students to go and study abroad for a year for their Master's education.

The dean at my college pulled me aside and encouraged me to apply. I was a bit anxious about the approval process but to my absolute surprise, I learned that no one had applied for it in the past 3 years! The donors were beyond ecstatic to finally have someone pursue the opportunity and that scholarship covered the bulk of my education.

Despite challenging times, there are opportunities that have been created to support the education of black men and women.

If you're in the market for scholarships, check out these amazing diversity-focused funding opportunities.

4. Consider refinancing your student loans if it makes sense

Sometimes, loan payments can feel overwhelming. If you find yourself in that situation, know that you do have options. One option to refinance your student loans.

Refinancing allows you to take out a new student loan to replace your existing one. This could help in several ways.

For instance, you can refinance your loans to lower your interest rate. It could also be that you have a lot of loans you're looking to combine into one to make the payment process easier. Or you may be looking to pay off your loans faster based on the new lower interest rates. These may be good reasons to refinance.

It is however important to note though that refinancing is not for everyone.

There will be instances where the new loan doesn't come with many benefits and could end up wasting your time. So before you make a decision, do your research. You can start with our guide to refinancing your student loans.

5. Negotiate your salary and raises, increase your income

Side hustles are all the rage nowadays but do you know there is a quicker and potentially easier way to earn more money?

Asking for a raise. It requires a few conversations at most and it doesn't require you to do any additional work.

As women, we tend to shy away from asking for a raise hoping that our hard work will be recognized and rewarded. We end up leaving money on the table.

It may be daunting to ask for a raise but doing so could really boost your savings and overall lifestyle.

If you have an entrepreneurial streak, starting a side hustle could be a great way to increase your income and you can also explore passive income streams.

6. Create a budget with a focus to pay down debt

This is a surefire way to tackle student debt. Without a budget, you'll be shooting blindly. A budget ensures that your student loans are a priority that is addressed every single month.

Debt often requires radical commitment in order to get free from it as quickly as possible. It involves short-term sacrifice for long term freedom and peace of mind.

If you're getting started with budgeting, it's important that you find a budgeting method that works best for you.

In closing

As black women continue to face the severe impact of the student loan crisis more so than other demographics, it's important that this issue continues to get highlighted to drive change.

If you are a black woman overwhelmed by your student loans, please know that despite the challenges noted above, you can still get ahead.  Be kind to yourself and lead with a plan.

A part of our mission here at Clever Girl Finance is to empower our community with the knowledge they need to understand how student debt really works. We will continue to empower women to tackle and get ahead on their debt in order to achieve their financial wellness and in turn gain financial power.

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