money 'I also defaulted': Congresswoman Ayanna Pressley reveals her experience with student loan debt
In a heartfelt moment speaking about racial disparities related to student debt, Representative Ayanna Pressley (D-MA) recently revealed that she defaulted on her student loans at one point.
"Like 85% of Black students, I had to borrow; and like so many of those students, I also defaulted on those loans," Pressley said during a press conference organized by the American Federation of Teachers. "We know that Black and Brown students are five times more likely to default for those loans, than our white counterparts."
Ricardo Sanchez, a spokesperson for the congresswoman, confirmed her experience with Yahoo Finance and stated: “Congresswoman Pressley, like many Black women who have disproportionately borne the impact of the student debt crisis, had student loans that were in default for a period of time and have since been paid off. With the public health and economic crisis worsening daily, she is committed to fighting for broad-based student debt cancellation—which would help reduce the racial wealth gap and stimulate our economy—and robust federal investments in education to make tuition-free college a reality.”
'The typical Black borrower owed about $17,500 more'
The experience of Pressley, who previously described student debt cancellation as "a matter of racial and economic justice across our country," is similar to other Americans of color who live with a student loan debt burden.
"Decades of systemic racism and discriminatory policies like redlining and predatory lending... systematically denied Black and Latinx families the opportunity to build wealth," Pressley said, "forcing our families to take on greater rates of student debt, just for the chance at the same degree as our white counterparts, and contributing to the $1.7 trillion student debt crisis that is disproportionately borne by black and brown communities."
A Demos report based on credit records of 35,000 student debtors, sampled from Experian’s entire credit database in December 2014, found that Black student debtors "are 16 percent more likely to be in default or seriously delinquent than white student debtors; Latino borrowers are 8 percent more likely."
Growing up in a single-parent household, Pressley explained, she was the first person in her immediate family to pursue higher education "and there wasn't anyone to hold my hand or a walk you through the college application process, or to fully explain what I was signing on to when I was signing all these documents."
A report from Brookings Institute by Judith Scott-Clayton noted that 38% of Black first-time college students in 2004 had defaulted within 12 years. That number is more than three times higher than white students' performance. Projecting those rates to 20 years out, the author added that as many as 70% of Black borrowers "may ultimately experience default."
According to a report by the Heller School for Social Policy and Management at Brandeis University, Black students are not only more likely to take on more student debt than their white peers but also more likely to carry that debt for longer periods of time.
Comparing the student cohort that started college in 1995-96, the researchers found while 43% of white students didn't take on any student loans, only 25% of Black students were able to avoid taking on debt to fund school.
Furthermore, the "the typical Black student borrower took out about $3,000 more in loans than their White peers," the authors stated, and "the typical Black borrower owed about $17,500 more than their White peers" 20 years later.
"Several Black [woman politicians] have now talked openly about having debt," Louise Seamster, an assistant professor at the University of Iowa, told Yahoo Finance. But the stigma of having debt lingers, she added, such as when Stacey Abrams disclosed that she had hundreds of thousands of dollars in debt when running for public office. Pressley's colleague Rep. Ilhan Omar (D-MN) has also tweeted on February 17 that she took on "thousands of dollars in debt" to attend a for-profit college.
"While it doesn't match our image of what Congresspeople are facing," Seamster added, "it's a sign of how stark the racial disparities are, that you can be successful and still not be able to pay off your student debt quickly."
Seamster added that defaulting on student loans was an issue that is often misunderstood.
"We think of debt as an individual thing that's shameful, it's your individual burden," she explained. "And default is thought of as shameful... but this idea of default contributes to a false narrative."
While executive orders have paused student loan payments for federally-backed debt amid the coronavirus pandemic, sending the overall delinquency rate plummeting, it's unclear how this will play out once the payment pause is lifted.
Democrats, including Pressley, are urging President Joe Biden to cancel $50,000 in student loan debt for roughly 43 million Americans through executive order.
Some experts argue that forgiveness could be a way to partly remedy the racial disparities created by the U.S. student loan system.
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Aarthi is a reporter for Yahoo Finance. She can be reached at aarthi@yahoofinance.com. Follow her on Twitter @aarthiswami.
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