1.
What are three things you notice about the graphs shown in the article? Explain what these particular things mean for students with debt.
Section 2.6 The Intersectional Inequities of Student Debt
The average undergraduate student who takes out student loans has around \(\$25,000\) in debt by the end of their higher education, according to the U.S. Department of Education. However, this debt is not spread equitably by demographic category: \(30\%\) of non-Hispanic-identifying Black families carry an education loan, compared to \(20\%\) of non-Hispanic white families and \(14\%\) of Hispanic-identifying families 48 .
Student debt is also not equally spread among age groups; Millennials (who were \(30\)-\(39\) years old in \(2021\)) total over \(\$500\) billion in student loan debt, compared to a little over \(\$350\) million of Gen Z (under \(30\) in \(2021\)), a little under \(\$350\) million held by those \(40\)-\(49\) years of age in \(2021\text{,}\) a bit under \(\$250\) million held by those \(50\)-\(59\) years old, and only around \(\$125\) million held by those \(60\) or older in \(2021\) 49 .
Since Black families have been prevented from amassing generational wealth through systemic racism (in which laws favor one racial group over another), the legacy of slavery and Jim Crow, and mass incarceration, as well as continued implicit and explicit racism in public policy, housing (including the legacy of redlining, a policy which conitnued through \(1977\)), private banking and lending, access to education, and hiring practices, Black folks are both more likely to have to take on debt to attend college and less likely to attain wealth due to a college education 50 .
In particular, a \(2013\) study found that the average white college-educated parent contributed \(\$73,500\) to their children's education, while Black parents contributed \(\$16,000\) on average. This is true despite the fact that, when controlling by household type and economic situation, Black parents contribute more on average than white parents.
Lower-income Black parents are disproportionately likely to take out Parent PLUS loans, which are loans provided by the U.S. Department of Education to the parents of college students. Parent PLUS loans are unsubsidized and charge a “loan fee” (added to each loan payment) of \(4.228\%\) and an interest rate of \(7.54\%\) as of \(2022\) 51 , adding a substantial financial burden to the parent borrower.
Under these circumstances, Black borrowers default on student loans five times more often that white borrowers
marka.brownStudentLoansNot2022. Therefore, the disproportionate load of student debt on Black borrowers is both a symptom of, and exacerbates, the racial wealth gap in the U.S., or the difference in total assets and debts between Black and white Americans.Defaulting on federal student loan debt leads to consequences such as bad credit ratings, a decrease in tax refunds, the garnishment of wages, and removal of security clearances which are at times a condition of employment 52 . The consequences for those who default include an inability to obtain loans to buy homes or cars, loss of wages, or loss of employment.
Exercises The Toll of Student Debt in the U.S.
Exercise Group.
The data in this section come partly from a New York Times article by Ella Koeze and Karl Russell entitled “The Toll of Student Debt in the U.S.” An archived version of the article can be accessed here 53 .
2.
What are three things you wonder about based on the article that are not answered in the article itself?
3.
Do some research online and find reputable sources to answer your questions above.
Reading Questions Trends in Student Aid
1.
Explain the difference between subsidized and unsubsidized federal loans. (You may have to use other online sources.)
2.
When did the federal government begin giving unsubsidized loans to students according to the chart in Trends in Student Aid? (You may also have to use other online sources.)
3.
Since the year \(2000\text{,}\) describe the trend for both subsidized and unsubsidized loans.
Reading Questions The Biden-Harris Loan Forgiveness Plans
In \(2022\) and \(2023\text{,}\) the Biden-Harris administration released a plan whose multiple components are designed to decrease the burden of student loan debt on lower-income individuals. Read the White House's announcement of the plan 55 , then answer the following questions.
1.
In your own words, describe the three main components of the White House's “student debt relief plan”. Who is impacted by each part? What impacts would the plan have on each group?
2.
Which do you feel is the most essential component of the plan? Why?
3.
What is the current status of this debt relief plan? You may have to do additional research online. Has it been blocked by the courts? Changed by legislation? Implemented in full? Why or why not?
Reading Questions Reading Questions
1.
The article hints that student loan debt has received national attention because college graduates have significant political power. Do you believe that student debt forgiveness is a privileged position to advocate for? Why or why not?
2.
Why might student debt exacerbate the racial wealth gap? Do you think it does?
3.
Do you believe that canceling student debt helps shrink the racial wealth gap? Why or why not?
4.
How could you use statistics to determine whether student loan debt was due to rising tuition/fees, inflation, or as the article mentions, the number of recipients attending grad school? What do you believe?
Reading Questions Reading Questions
According to a late 2017 study by the Organisation for Economic Cooperation and Development 57 , the U.S. has the greatest annual average tuition and fees of all surveyed countries charged to nationals of that country. Note that the symbols ‘a’ in the table mean “the category does not pply”, while ‘m’ means “data are not available” (missing).
1.
What general trends (by continent, region, degree type, or type of institution) do you notice in the table? Explain.
2.
What impact may the missing or “not applicable” data have on the general trends observed in the table? Explain.
Reading Questions Reading the News on Student Loans
Part of quantitative literacy is being able to critically interpret numbers and mathematics in the news media. To that end, find an article from the last four years involving student loans that makes at least 2-3 numerical claims. The College Board website 58 or reputable news sources (New York Times, Washington Post, Reuters, Associated Press, etc.) about government policy on student loans and loan forgiveness are good sources,; you're welcome to find your own sources as well. Take the number(s) in your article and do the following:
1.
Decide what point the article is trying to make by citing these numbers.
2.
Before pulling out an electronic device, brainstorm a list of questions (3-5) you'd like to know about the numbers–things that would help you understand if the numbers are big or small, and whether or not the underlying data actually supports the article's argument.
3.
Get online and try to answer your questions.
4.
Rate the article's claims on two scales:
- How true is the statement? (0 = completely false, 4 = completely true)
- How misleading is the statement? (0 = not at all, 4 = totally misleading) (In other words, when you look at the underlying data, does it support the article's point or not?)
Exercises Student Debt by Race: What Is Fair?
Exercise Group.
Compare the total amount paid in student debt for various racial groups using this table 59 .
1.
Does it seem like any racial groups are being disproportionately saddled with student loan debt? How can we compare, say, debt held by white vs. Asian students to see whether the difference is larger than we'd expect? Well, first we need to quantify the idea of “what we'd expect”...what does this mean? Create an expected frequency table for what you'd expect to see if there were absolutely no racial differences in student debt.
2.
Compute the difference between the observed count for each race \(O\) and the expected count \(E\text{.}\) What do you notice?
3.
What if we averaged all the \(O-E\)'s for each racial group? This is effectively the idea of a chi-squared test for goodness-of-fit, which is used by statisticians to determine whether any differences observed are small enough to be due to chance or large enough that they give evidence of a difference. What would the equation for this average look like?
4.
We'll use a computer to perform this test in a minute. First, what groups do you think are disproportionately likely/unlikely to hold student loan debt? What racial groups have a higher/lower debt burden per person?
5.
Now, enter this data into an app such as RStudio or an online tool. In RStudio, run this code to do a chi-squared test. (In a statistics class, walk through the steps.) Output the \(p\)-value (the likelihood the observed differences are due to chance alone) and residuals, which are basically scaled versions of the \(O-E\) s for each racial group. Which are highest? Lowest? Is there evidence of racial bias?
If these materials are being used for a course in, say, introductory statistics for STEM fields or a higher-level data science class, this is a good time to discuss linear regression with multiple predictors 60 to formalize the effect of year and type of institution on tuition or race and year on student debt. However, since this text is primarily intended for courses without prerequisites targeted at majors and non-majors alike, such material is beyond the scope of this chapter.
nytimes.com/interactive/2022/08/26/your-money/student-loan-forgiveness-debt.htmlnytimes.com/interactive/2022/08/26/your-money/student-loan-forgiveness-debt.htmleric.ed.gov/?id=ED621932studentaid.gov/help-center/answers/article/what-is-parent-plus-loanwww.proquest.com/openview/e5f160af46c6a00c16709c8f31c7311f/1?pq-origsite=gscholar&cbl=18750&diss=yweb.archive.org/web/20230122063133/https://www.nytimes.com/interactive/2022/08/26/your-money/student-loan-forgiveness-debt.htmlresearch.collegeboard.org/trends/student-aidstudentaid.gov/debt-relief-announcementwebcache.googleusercontent.com/search?q=cache:QCadmloDEIoJ:https://www.theatlantic.com/ideas/archive/2022/04/should-biden-forgive-student-loan-debt/629700/&cd=18&hl=en&ct=clnk&gl=usread.oecd-ilibrary.org/education/education-at-a-glance-2017_eag-2017-en#page222trends.collegeboard.org/college-pricing/figures-tables/variation-published-priceshttps://trends.collegeboard.org/college-pricing/figures-tables/variation-published-pricesnces.ed.gov/fastfacts/display.asp?id=900openintro-ims.netlify.app/model-mlr.html
