A bachelor’s degree is one of the single most effective pathways to economic mobility in America today. Yet the promise of higher education as an engine of economic opportunity belies persistent racial disparities throughout the higher education pipeline—from access and enrollment to employment and loan repayment outcomes.
These opportunity and outcome gaps for Black, Indigenous, and other people of color in higher education hurt individuals, families, and communities, in addition to hampering U.S. economic growth. Here are four bipartisan improvements to federal policy that would work to address these longstanding racial inequities.
The high cost of college is a critical barrier to Black, Indigenous, and other students of color, in part due to longstanding wealth and income disparities. As college prices have risen, need-based aid has not kept pace. This pattern hurts Black students in particular, who are more likely to borrow to pay for college—and more likely to take on higher levels of debt.
Expanding need-based aid through the Pell Grant program would promote affordability and improve outcomes for students of color. Among Pell-eligible students, an additional $3,500 in annual grant aid is associated with up to a 5 percentage point increase in bachelor’s degree attainment. Restoring Pell Grant eligibility to incarcerated individuals is also key to increasing access for Black students, as Black incarceration rates are five times that of white incarceration rates.
Historically Black Colleges and Universities, other Minority Serving Institutions including Tribal Colleges and Hispanic-Serving Institutions, and community colleges disproportionately serve students of color and are often under-resourced. HBCUs receive less federal funding per student than their non-HBCU counterparts, and while they account for only 3% of institutions participating in the federal student aid program, they award 17% of all Black bachelor’s degrees. Additionally, as Hispanic enrollment has increased nationally, schools are increasingly being designated as HSIs, but federal funding is not keeping pace. HSIs receive, on average and on a per-student basis, 69 cents for every dollar of federal funding going to other colleges and universities.
As proven engines of mobility, policymakers should target additional support to MSIs to boost their capacity to serve students of color. These funds should be given directly to institutions and used for evidence-based interventions that break down barriers and improve outcomes.
As the economic fallout from COVID-19 threatens the already fragile balance sheets of postsecondary institutions across the country, a wave of college closures seems inevitable. If past is precedent, this will disproportionately harm students of color, who accounted for 57% of those impacted by shuttered schools between 2014 and 2018.
When a college closes unexpectedly, students are left with few options to continue progress toward their degree. Students can elect to have their federal student loans forgiven—giving up any credits earned—or participate in a teach-out plan set forth by their closing school. Teach-out plans, however, are often hastily designed or lack funding, putting students at increased risk of not completing their degrees. The risk is even greater for Black, Indigenous, and Hispanic students, who tend to take longer to complete their degrees and drop out at rates higher than their peers. Requiring schools to develop and maintain a robust, funded teach-out plan would preserve pathways to degree completion for students whose schools unexpectedly close.
Many borrowers struggle to repay their loans, but the burden falls disproportionately on Black borrowers. Research suggests that 20 years after college enrollment, the median white student loan borrower has paid off all but 6% of their accumulated student loan debt, while the median Black borrower still owes 95% of their accumulated debt. According to data from the National Center for Education Statistics, Black borrowers are also nearly 2.5 times as likely to default on their loans as white borrowers within six years of entering repayment, bearing long-term negative consequences on credit and opportunities for wealth accumulation.
Income-driven repayment plans, which tie student loan payments to a percentage of discretionary income and offer debt forgiveness after a certain number of years, provide critical support to struggling borrowers. Yet a complicated application and burdensome income-verification requirements hamper uptake. Automatically enrolling borrowers in an IDR plan would eliminate these barriers and put downward pressure on delinquency and default rates. Auto-IDR has broad support among likely voters—in a recent BPC poll, 83% were positively inclined toward the policy. Policymakers could also consider adjusting IDR payments so that they capture a lower percentage of borrowers’ incomes—particularly at lower income levels—which would reduce payment obligations and further promote affordability. With student loan payments and interest currently suspended through September for many borrowers, policymakers have an opportune window to implement reforms that provide critical support to those who are struggling.
Ultimately, federal policy must work towards creating a system where race no longer plays a defining role in one’s education or career outcomes. Lawmakers have an opportunity to advance higher education reforms that would not only benefit students and families across the country and boost economic growth, but address longstanding inequality by promoting opportunity among and beyond communities of color.