Inside this week’s theme: Default patterns
More than 42 million Americans, or 1 in 8, have student loan debt. Collectively, they owe the federal government more than $1.5 trillion to pay off those education expenses (plus another $130 billion more to private lenders). According to Brookings, student loans account for the second-largest share of household debt, after mortgages.
Around 10% of student loans are currently in default. Among those who default, a disproportionate number of borrowers are Black. Compared to their peers, Black students are more likely to take out loans, often larger loans, and have trouble repaying them; researchers have called it the Black student debt crisis. And the solutions must be multifaceted — addressing the racial wealth gap and employment discrimination, securing public funding for historically Black colleges and universities, and other avenues.
Research consistently shows that college-educated adults experience less unemployment and can earn more money over a lifetime of work than counterparts with a high school degree. That, in theory, is the payoff for the sizable financial gamble students and their families take — provided the game isn’t rigged.
Next week, we’ll have one final interview in our “Reimagining the Economy” series, then we’ll have an announcement about what’s next for Econ Extra Credit in 2021. (Hint: You may want to pop some popcorn for it.)