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Racial Disparities in Student Loan Affordability

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April 3, 2024

At a Glance

JFF analyzes monthly student loan repayment burdens across racial groups, finding that, on average, Black borrowers pay a greater percentage of their monthly income toward student loans than white borrowers.

Key Takeaways 

  1. On average, Black borrowers pay 3.6% of their monthly income toward student loans than white borrowers, and 2.6% more than white borrowers even when controlling for education, gender, and total amount borrowed. 
  2. Enrolling in a federal income-driven repayment (IDR) program does not significantly close the income repayment gap between Black and white borrowers. 
  3. Moving toward financing approaches where borrowers’ payments are entirely based on their earnings can help close disparities in monthly repayment burdens. This could include strengthening the federal IDR program and encouraging the private market to use outcomes-based loans and income share agreements, rather than fixed-payment loans. 
Umair Tarbhai Senior Analyst
Ethan Pollack Senior Director
Practices & Centers Topics


Student debt has exploded over the past several decades, rising to over $1.7 trillion. Federal student loans represent over 90% of student loan balances, with private financing making up the remainder. Research has shown that the negative impact of student debt has not been distributed equally across different demographics, with Black borrowers disproportionately feeling the adverse effects of student debt. Yet to date, little research has explored how monthly repayment burdens— defined as the borrower’s monthly payment as a share of their earnings—vary across different demographic groups or how that may relate to the specific fixed-payment structure of student loans. 

This study uses the 2019 Survey of Consumer Finances (SCF), a comprehensive national survey of U.S. families’ financial lives, to identify differences in monthly repayment burdens across racial groups. Not controlling for factors like education and gender, this analysis found Black borrowers on average paid 3.6% more of their monthly income toward student loans compared to white borrowers. Even after controlling for education, marital status, sex, and the total amount borrowed in student loans, Black borrowers on average still paid 2.6% more of their monthly income toward loan repayment compared to white borrowers. Our analysis also indicated enrollment in a federal income-driven repayment (IDR) plan does not significantly affect this disparity. 

These results could be driven by lower earnings of Black borrowers, making their monthly repayment burdens higher than those of white borrowers in otherwise similar situations. Shifting how students finance their education away from fixed-payment loans and toward income-contingent financing, in which all borrowers above a certain earnings threshold pay the same share of their income in monthly payments, would likely close these disparities in monthly repayment burdens. 

While we expect President Joe Biden’s new IDR plan, especially the automatic enrollment feature, to reduce these monthly repayment burden disparities in the Title IV market, further reforms—including mandatory enrollment in the new IDR plan and reducing the program’s complexity and administrative burdens, which lead to Black borrowers enrolling in IDR programs at lower rates—should be explored.  Moreover, in the non-Title IV market, the movement toward income-contingent financing, such as outcome-based loans, should be encouraged and closely monitored. 

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