Magazine article The Crisis

American Money: Is Less College Debt Always Better?

Magazine article The Crisis

American Money: Is Less College Debt Always Better?

Article excerpt

The national student loan debt has reached a new milestone at $1.2 trillion, and many experts are speculating about its impact on students.

It's a relevant question for minorities in particular, since they are hit harder by crushing loans: Minorities are more likely to take on more student loan debt and to graduate with more debt.

A 2010 study by the College Board Advocacy & Policy Center found that student loan debt amounts of $30,500 or higher were more common among Black bachelor's degree recipients than their White counterparts.

Debt reduction is a particular point of concern for the Black community. According to a recent survey by Prudential, a higher percentage of African Americans-about 48 percent-cited debt as a top financial priority compared with the general population. The same survey also shows that one in four African Americans experienced depression and anxiety as a result of debt.

But fretting too much over student loans may be counterproductive. A growing body of research suggests that students who take out loans to pay tuition are actually more likely to stay in college.

A 2005 study by the National Center for Public Policy in Higher Education that tracked undergraduates found that 23 percent of borrowers dropped out, compared with 44 percent of non-borrowers. A 2008 paper analyzing Department of Education data found similar results among minority students.

Make no mistake-much of the concern around student loan debt is valid. Gippling student loan debt can impede wealth-building later in life. …

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