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Student Loans Weigh Heavily On Black And Latino Borrowers In North Carolina

Está historia está disponible en español en La Noticia

Reatna Taylor had big dreams to become a primary care physician when she entered Johnson C. Smith University. She graduated in 2015 with a bachelor’s degree in biology. A partial scholarship covered most of her tuition, but she still had to take out $54,000 in student loans to cover all of the other expenses that come with being a college student.

Both of Taylor's parents are from Panama. Because she was the first in her family to go to a four-year college, they didn’t understand how expensive it was going to be.

“I don't think that they understood how much college was either,” Taylor said, “because my mom did have like a college fund started for both me and my brother, but it was like $2,400, maybe, when I graduated.”

Taylor continued her education at UNC-Chapel Hill, getting a master’s in public health. That cost her another $52,000 a year. By graduation, she had racked up $185,000 in student loan debt.

Some of it was because she paid out-of-state tuition and had missed payments on earlier loans. Because she hadn’t consolidated them, her interest varied from lender to lender. This debt is partly why she put her dreams of becoming a doctor on hold.

Taylor now works as a nutritionist for Mecklenburg County. She’s also a new mom currently on maternity leave, so she took advantage of the pause on federal student loan payments to have more money to care for her family.

“It's been like a huge relief to not really have to think about, like, $1,500 more going somewhere that could be paying for other things that we need,” she said.

The Department of Education put a pause on federal student loan payments and interest at the start of the coronavirus pandemic. Borrowers don’t need to opt in and won’t be penalized for skipping payments. The pause was supposed to end Jan. 31, but shortly after taking office, President Biden pushed the deadline to Sept. 30.

There’s $1.5 trillion nationally in student loan debt. Borrowers in North Carolina alone owe $44 billion, according to Rochelle Sparko, the director of North Carolina Policy at The Center for Responsible Lending.

Sparko says North Carolina mirrors what’s happening in the U.S., with Black and Latino students borrowing at higher rates. Ninety percent of Black students and 72% of Latino students nationwide take out student loans, compared to 66% of white students. Sparko says this is because they tend to lack generational wealth to help pay for school.

“Because of the lack of intergenerational wealth, Black borrowers are starting off their careers at a disadvantage, tending to carry more debt,” Sparko said. “They face earning less in the job market than white counterparts, and so, their ability to repay their student loan debt can also be impacted by institutionalized racism.”

In fact, the Student Borrower Protection Center, a consumer advocacy group, analyzed ZIP codes in major U.S. cities and found that the median income for white households is at least 10 times the median income of Black and Latino households, making white students more likely to receive help from their families to pay for school.

Once it’s time to repay their loans, Black and Latino borrowers have a harder time keeping up with payments, especially if they live in communities of color. Black and Latino borrowers who live in mostly Black and/or Latino communities are five times more likely to default on their loans. Sparko says this can keep them from getting a house, a car and even more loans for businesses.

“In the case of, for instance, PPP loans, which were for small businesses during the pandemic, if you had a student loan where you missed payments, you might not have been eligible to get a loan to keep your business afloat,” she said.

This downward spiral is what Joshira Maduro has worked hard to avoid. For eight years she’s lived with her parents, on a strict budget, paying off her $132,000 of student loan debt.

Maduro graduated from Lehigh University in Pennsylvania with a degree in finance and marketing. She’s the first in her family to attend a four-year college in the U.S. Her mom is from Curaçao in the Caribbean, and her dad is from the Netherlands. He went to school overseas, where higher education wasn’t as expensive. So when Maduro finished high school, she and her parents were clueless about how to pay for college.

“His colleagues had children going to law school, taking out $200,000 in debt,” Maduro said of her father. “And so to him, he felt like, ‘OK, well, if you need to take a $100,000 (loan), it just seems like it's natural. You take six figures out of debt, like it's not unheard of.’”

Tuition at Lehigh was almost as much as Harvard — nearly $55,000 per year in 2020— but she fell in love with the campus after visiting while in high school. A lack of financial knowledge is one reason why student loan debt is so high among Black and Latino borrowers, experts say. Maduro says her family didn’t know federal loans were an option, so her dad told her to take out a loan from a bank. With private loans, she couldn’t take advantage of the pandemic payment freeze.

However, after eight years, she’s paid off close to $120,000 of her student loans, taking her payments from $1,300 a month to $500.

“Now I have a payment that doesn't feel so emotionally draining each month,” Maduro said. “It still hurts to have that much money in debt for education that happened eight years ago, but it definitely doesn't feel as, like, emotionally intense.”

Although Maduro majored in finance, her loan customer service agents were some of her best teachers.

“I knew some of them by first name because eventually I’d call around the same time and I'd get them and they would tell me, like, ‘Oh, that's a great question, actually. Here's what you can do,’” she said.

She took everything she learned and turned it into a career. Maduro now works at Lending Tree, helping others manage their credit card debt and personal finances. She says she makes a point to tell her clients that once they can get their debt down to a certain point, to get back to investing in their future.

Because making those personal investments will help them in the long run.

Additional Resources For Those Who Need Help

GreenPath provides tips for managing your debt through the COVID-19 pandemic.

The Consumer Financial Protection Bureau offers information on how to take out a loan and advice on repaying them.

Calculate your payment options with the Federal Student Aid simulator.

Copyright 2021 WFAE. To see more, visit WFAE.

/ Reatna Taylor
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/ Joshira Maduro
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