Betsy DeVos said the federal student loan industry is broken. The system is broken, but not necessarily for the reason DeVos believes. DeVos focuses on taxpayers while there is a more pressing discrepancy – race.
The Federal Reserve Bank of New York reported that in the third quarter of 2019, 11% of the total student debt was over 90 days delinquent or in default. The study further concluded that student loan borrowers from primarily Black geographical locations are twice as likely to be in default as student loan borrowers in majority White geographical locations. The student loan default rate in primarily White geographical locations is 9%; compared to the 17.7% default rate among Black geographical zip codes.
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This study is disturbing as it indicates that there are discrepancies that prevent affordable, quality education from becoming accessible to all Americans in an equitable manner.
The study suggests that the reason for the discrepancies is the particular decisions of the borrower. The study said that factors such as the institution attended, selected market, and parental financial support. These factors, however, all trace back to limited education access among African Americans.
More studies and evaluations should be conducted to find all discrepancies and inequalities not only in the student loan program, but also all institutions and respective majors. Transformation must then occur to make education affordable and accessible to all, regardless of race.