Here’s How Student Loan Debt Impacts Black Borrowers’ Mental Health

Black borrowers’ could see up to $20,000 wiped from their student loan accounts. They might also experience some relief from financial stress. (Credit: Tima Miroshnichenko / Pexels)

by Alexa Spencer

The Biden Administration announced a student debt cancellation plan that could wipe out up to $20K in loans per borrower. This is good news for borrowers whose mental health is negatively impacted by the stress of student loan debt.

The American Public Health Association reported in 2021 that debt can cause financial stress that triggers depression, anxiety, high blood pressure, and other symptoms.

A 2022 report from the Education Trust reveals that Black student loan borrowers — who are overrepresented among loan borrowers — are feeling the health consequences.

64% of respondents who participated in the National Black Student Debt Survey reported that student debt negatively affected their mental health.

“Stress looks different from one person to another, but specifically from the responses in our study, we know that they had…depression, loss of confidence…anxiety…a few reports of suicidal ideations,” says Brittani Williams, a senior policy analyst at the Education Trust.

Many borrowers have found themselves making sacrifices to meet the agreements of their loan repayment plan. Some delayed home ownership and starting a family. Others have struggled to meet their basic needs, even when their monthly loan repayment is based on their income.

Collectively, about 45 million Americans owe $1.7 trillion in student debt, but Black borrowers are particularly vulnerable to loan-related stress. 

Those who hold a bachelor’s degree have an average of $52,000 in student loan debt, compared to white bachelor’s degree holders who owe an average of $28,000.

Black borrowers are also more likely to struggle with repaying their loans.

“Twelve years after starting college, the typical Black borrower owes 13% more than they originally borrowed and has paid down none of their balance, while the typical White borrower has successfully paid down 35% of their original loan balance,” the Education Trust report says.

Williams says the financial disparities between Black and non-Black borrowers are a racial wealth gap issue. Due to generations of racist public policy, Black families have amassed far less wealth than white families.

In 2019, the median Black household held $24,000 in wealth, compared to the median white household holding $188,200 in wealth.

“Particularly for Black Americans entering institutions of higher education, they are seeking opportunities for upward economic mobility,” Williams says. “And so, for a lot of low-wealth Black Americans, that means accruing that student loan debt, because that is the only measure that they have to actually be able to pay for these higher education expenses.”

Black borrowers’ may find some refuge with the Biden Administration’s one-time debt cancellation plan.

The plan, which targets low and middle-income families, is extending up to $20,000 in cancellations for borrowers’ who’ve received the Pell Grant and up to $10,000 in cancellations for non-Pell Grant recipients.

During the 2015-2016 academic year, 72% of Black students received the need-based federal grant, versus 34% of white students; the National Center for Education Statistics reports.

Overall, 46% of all Black undergraduate students receive the Pell Grant.

Williams says “I do believe that canceling the $10-20K will provide some relief of mental stress … (but) there is more work to be done.”

In order to put an end to the student loan crisis — and improve the mental health crisis among Black borrowers — the Education Trust recommends that the Biden Administration cancel at least $50,000 in loans per borrower, improve the income-driven repayment plan to make payments more affordable, double the Pell Grant, and make public college debt-free.

“There are certain things that we believe policymakers should do to alleviate this burden of student loan debt and prevent a student loan debt crisis from reoccurring,” Williams says.

Student loan repayment is set to resume in Jan. 2023.