Mapping Student Debt
How much of your paycheck goes towards student loans?
Higher education is supposed to be the great equalizer, the one-way ticket to the security and prosperity of the middle class. But with 44 million Americans struggling with more than $1.4 trillion of student debt, the very thing that’s supposed to level out the playing field, in fact, makes disparities a lot worse.
A new interactive map released today by Generation Progress, the youth-engagement arm of the Center for American Progress, breaks down average student debt burden—the percent of income spent on student loan payments—for each zip code across the nation. As the third installation of the Mapping Student Debt project, the map aims to highlight exactly which neighborhoods feels the most debt pressure in their everyday spending.
Americans pay an average of 6 percent of each paycheck toward student loans, but in large cities that tend to have more young and low-income borrowers, like New York City or Washington, D.C., debt burden can surpass 10 percent. That’s way more than the 5.5 percent of a paycheck that Americans typically spend on groceries, according to the Department of Agriculture.
Researchers found that debt burden is highest in neighborhoods like southeast D.C., where employment rates are low, signaling how the student debt crisis is closely linked to the health of the labor market. Areas with low debt burden tend to have higher average loan balances, like in Manhattan, suggesting that those who take on more student loans already have the financial stability to pay it off more easily, or more access to high-paying jobs post-graduation. But Marshall Steinbaum, research director at the Roosevelt Institute who worked with Generation Progress on the project, believes these geographic disparities are caused by more than just higher salaries, but also the stark racial and income segregation within cities.
He theorizes that these disparities are due to credentialization: jobs that previously would not have required higher education (and thus the student debt that comes along with it), now do. Pair this with the fact that the cost of college is rising nearly eight times faster than wages, and many recent graduates are stuck with the same salary, but mounting debt. For those who are poor and living in neighborhoods with lower-performing labor markets, this translates to a higher debt burden, as shown in the maps.
“There is the story that we were always told: go to college, take out the loans, they’re an investment in your future, everything will be fine,” said Maggie Thompson, executive director of Generation Progress. “The student debt market is, in some ways, a reflection of structural racism and the wealth gap in this country.”
The way students manage this increasing credentialization varies by race. One 2016 study found that white students are more likely to be from higher socioeconomic backgrounds and thus have the family support to obtain more education and pay off their debt more easily. Students of color are more likely to be lower-income and thus without that family support, so the debt piles up.
The study also found that at the time of graduation, black students owe $7,400 more in loans on average than white students, but over the next few years, the gap more than triples to $25,000. Even after controlling for family wealth, the racial gap still appeared, hinting that it’s not just rich parents causing the discrepancies, but also lower post-grad salaries or accruing interest. Latino graduates showed a similar, but slightly smaller disparity. The infamous motto, “Work twice as hard to get half as far” applies precisely to student debt; in fact, it might even be three times as hard.
The Consumer Financial Protection Bureau says this all accumulates into the “domino effect”: Student loan borrowers are more likely to delay purchasing a home or car, saving for retirement, starting a business, or even getting married. With a higher student burden, recent graduates are squeezed out of taking the next steps in their adult lives.
Half of the student debt battle is convincing politicians that this is even a battle to begin with. The Department of Education is increasing interest rates while rolling back regulations on loans for for-profit colleges. The vote in Congress on the PROSPER Act, which would eliminate the public service loan forgiveness program and other subsidized student loans, is still in limbo.
For some, the student debt crisis isn’t a policy issue, but an issue of individual responsibility. When the department tried to overturn loan forgiveness programs for students swindled by predatory for-profit colleges, which have been found to use deceptive methods to recruit more students, it released a statement asserting that “Postsecondary students are adults who can be reasonably expected to make informed decisions if they have access to relevant and reliable data about program outcomes.” Education Secretary Betsy DeVos painted the loan-forgiveness programs more negatively, saying that students could simply raise their hands “to be entitled to so-called free money.”
Steinbaum says this perception is wrong: It’s not entitled Millennials who are burdened by student debt, but rather those who are just trying to reach the middle class and fall into the trap of cryptic financial aid packages and high interest rates.
“The people burdened by student debt are not the kind of overprivileged Millennials who majored in the wrong thing, took on too many degrees, and have themselves to blame for being in the hole,” said Steinbaum. “But rather, it’s the people who were told that this is the only way to get ahead.”
Despite action at the federal level, some state policymakers are making moves on the student debt crisis. Thirteen states and Washington, D.C., have passed proposals for some form of a Borrower’s Bill of Rights, to ensure consumer protections by establishing a student loan ombudsman, collecting data on complaints, and developing loan education courses. In 2015, Connecticut was the first state to pass such a bill.
“It shouldn’t be up to individual students, making their decision about where to go to school to fix this,” said Thompson. “This is a structural problem that policymakers need to fix. Regardless of your level of government, this is something that’s impacting your constituents and you need to take action.”
Steinbaum draws the metaphor of walking up the down escalator: As you accumulate more education, you drown further in debt. Students are working hard, but the student debt crisis is hardly working.
About the Author
Claire Tran is an editorial fellow at CityLab.
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