Program Report:Student Debt in North Carolina: Hardest Hit Communities

Robin Howarth, Senior Researcher, Center for Responsible Lending

Felicia Deloatch introduced our guest speaker

In her introduction of Robin Howarth, Past President Lois Deloatch spoke of her colleague’s background in Finance and Banking on the West Coast after earning Bachelors and Master’s Degrees from Stanford. Robin focused on Finance and Community Development as a visiting Professor at UNC after earning her Ph.D there. Since joining CRL in 2015, Robin has followed Student Lending along with other issues as Senior Researcher. The Center for Responsible Lending, founded by Self-Help, is based in Durham with offices in Washington DC and Oakland CA.

Robin highlighted the dimensions of the Student Loan Crisis with startling statistics. On a Federal level 44 million borrowers owe a total of $1.5 trillion. One-fifth of all US Households hold a portion of that debt. The average debt per student is $37,000.

 Though those statistics are alarming in themselves, the even more frightening part of the picture surrounds the rate of default and the effect of this debt load on the borrowers, their families and our communities. 40% of those borrowers are likely to eventually default. Many of those not in default can only pay the minimum required to stay current. Many older adults are caught in this web because they have cosigned for their children or grandchildren. 

Robin pointed out that the effects are widespread and are reflected in a growing trend toward delayed family formation, accompanied by delays in home buying. Effects are also seen in lower rates of entrepreneurial activity, reduced savings for retirement and worsening wealth instability.Graduates are finding that their debt loads force them to make “safe” choices for employment that limit earning levels in the long term. 

The effects on African-Americans and other people of color are even more pronounced. These portions of our communities frequently make less progress in paying off their debt and have higher rates of default. Much of this is a result of unequal pay rates and uneven rates of recovery felt since the “Great Recession” by them. 

North Carolina is seeing the 2nd highest increase in student loan debt in the country. 57% of all students in the state are carrying debt. 16% of borrowers in the state are in default. She said that, 20% of “borrowers of color” are in collection vs. a rate of 14% for white borrowers and rural borrowers are more likely to have difficulty with repayment than urban. 

  • The solutions to this crisis are controversial and are being debated far and wide across the political divide. Loan forgiveness has been discussed along with a move to more income based grants. Larger investments in HBCU’s have been mentioned as a cost effective approach.

 A number of questions arose for Robin from the audience and she was surrounded by club members eager to discuss the issues further at the close of the meeting.

 Submitted by Doug Butler

7 October 2019

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