The Institute on Assets and Social Policy (IASP) at Heller School for Social Policy and Management at Brandeis University has released powerful findings on the destructive long-term impacts of holding student loans, especially for first generation students and students of color.

Stalling Dreams: How Student Debt is Disrupting Life Chances and Widening the Racial Wealth Gap” reveals how student loans widen the racial wealth gap and threaten long-term economic security for those who cannot count on family wealth to support their educational ambitions.

“Black borrowers are much more likely to experience long-term financial insecurity due to student loans,” says IASP Director Thomas Shapiro. “The current higher education financing regime exacerbates inequality, and student loans adversely affect the black-white racial wealth gap.”

In an environment where average college tuition toll amounts to 25% of the typical family income, up from 9% in the 1960s, “Stalling Dreams” highlights the long-term impacts as more and more students take on student loans to complete their higher education. Key findings include:

  • Loans for a lifetime: Within 20 years, the typical white borrower’s loans are paid, while the typical black borrower has to hold on to a large portion of their loans;
  • Default is surprisingly common: More than 25% of all borrowers, 50% of black borrowers and 33% of Latino borrowers defaulted on their loans within 20 years;
  • Impacts on racial wealth disparities are stark: In their 30s, a typical white individual with no student loans holds more than $35,000 in wealth, while a typical black individual is more than $10,000 in debt;
  • Student debt cuts into overall wealth: Having ever held student debt curtails wealth at age 30 for everyone by about $8,200, independent of the value of current student loan debt.





Laura Sullivan, Tatjana Meschede, Thomas Shapiro, and Fernanda Escobar