Student Loan Debt: A Disproportionate Burden on Black and Latino Borrowers

A student holds some books and looks forward.

Millions of Americans are affected by the burden of student loan debt. In the United States, student loan debt is nearing $2 trillion, and Californians carry approximately $150 billion of the debt. Student loan debt is now the second highest consumer market after mortgages. Rising college costs, predatory practices, and a flawed student loan system have all contributed to the student loan crisis of today.

For some borrowers, the impact is even greater. Black and Latino borrowers are disproportionately impacted by student loan debt. Due to racial wealth disparities, most Black and Latino college students come from low-income backgrounds and can count on only a fraction of the financial support. Over half (56 percent) of the students who attend public two- and four-year institutions in California come from families that earn under $40,000 annually.  Subsequently, 90 percent of Black and 72 percent of Latino students take out student loans, compared to 66 percent of white borrowers.

That means they borrow more and once they graduate; they are faced with an inequitable job market where they earn less than their white counterparts. Those who do not graduate face even more financial obstacles and have higher rates of delinquency and default. In 2021, 17 percent of Black borrowers and 18 percent of Latinx borrowers reported being behind on their student loan debt compared to 9 percent of white borrowers. More debt and less support have undeniably led to long-term debt burden and severe financial consequences. Although more students of color are attending college and pursuing the “American Dream,” student debt has delayed them from purchasing homes, starting businesses, and building generational wealth.

According to a report from the Institute on Assets and Social Policy, 20 years after starting college, the median Black student borrower still owes 95% of their original loan while the median debt of a white borrower has been reduced by 94 percent. As a result, debt-financed higher education is sharpening the racial wealth gap rather than reducing it. The median Black household has just 15% of the wealth the median white household has, but for households with student debt, comparative Black wealth shrinks to only 5%. Black women have the highest debt burden of all.

As the California Student Loan Servicing Ombudsperson, Celina Damian has a front-row seat to Californians’ student loan struggles. She hears from borrowers every day whose crushing student loans have affected their lives, their families, and even their career choices. But her connection to the issue runs much deeper. As a first-generation student with immigrant parents, Damian’s experiences shaped her passion for educating and advocating for those who don’t have a voice or a full understanding of the student loan system. Those who have been undeniably left behind and are struggling the most.

Celina Damian's photo

In her own words: Celina Damian reflects on her personal experiences and how she builds on it to help student borrowers.

From the beginning, my mother told me that I needed to go to a good school and get a good education. That was also the message for many of my peers. So, for 12 years I was bused away from my neighborhood to La Jolla, a wealthier part of San Diego. The cultural and wealth gap was clear from day one and significantly shaped my educational experience. Once we got to middle school, classmates started talking about attending college and many already knew which colleges they were attending. They would say things like, “I’m going to such-and-such school,’” or “I’m going to my parents’ alma mater.” But college always felt out of reach for a person like me, and I thought it was only for rich people. The difference, the gap, was so apparent.

Because the value of a college education was so impressed upon me, I believed that getting a degree was the only way to be successful, however I had no idea how I would do it.

In high school, students from wealthier families had trusts or college funds and were taking college tours. They had choices. Although my community and family believed in education, they lived paycheck to paycheck and could not provide financial support. In contrast, most of my friends and I were already working part-time to help their families. Our choices were limited, and we had to figure it out on our own.

The gap in resources was compounded by a gap in knowledge. We didn’t have advisors to help us understand majors or help with college and financial aid applications. Most of my peers opted for community colleges or were recruited by for-profit institutions where they were promised quick career training. Short-term career training sounded like a promising option, but little did students know that their predatory tactics would leave them indebted for decades. A few received scholarships and got into UCs or CSUs but would also have to take on student loans to complete their degrees.

 When you’re young and focused on earning a degree or certificate, you don’t think about the consequences of amassing student loan debt. Aside from the lack of transparency from financial aid offices and schools, financial literacy was not discussed at home, and we were navigating the system on our own. We took on student loans not understanding how detrimental they may be to our financial futures. I remember hearing many times that the only good debt was student loan debt. That was not necessarily the case.

Now years later, we see the impact. Many who rode the school bus, the city bus, or were working to help their families are still struggling. Those with student loans are working hard and making their student loan payments but are not seeing their balances decrease. Many must choose between paying rent or making a student loan payment and putting money into an emergency or retirement fund is out of the question. Some are considering taking out student loans for their own kids but know it may not be the best decision. In this country, college is promoted as the path to better careers and higher incomes, a way we can close the racial wealth gap. The truth is that it has done the opposite.

Students of color carry a higher debt load and end up paying their debts off more slowly. A borrower in a 75 percent minority neighborhood is 4.2 times more likely to fall behind on their student loan payments. I meet people every day who tell me the impact their debt has had on them. They’ve had their options in life limited and some even regret going to college. I speak to borrowers who have been paying for over 20 years and their balance is higher than they originally borrowed. I recently spoke to a borrower who asked if her loans would be forgiven when she died at least. It’s that feeling of hopelessness that resonates with so many who were trying to get an education and pursue that American Dream.

As the Ombudsperson, I work with Californians to help them understand their loans, apply for forgiveness programs, and understand their repayment options. I inform them of their rights and provide valuable resources and information. Another area I am dedicated to is educating families and students in the community. I see myself in them and understand that they may be feeling overwhelmed and uncertain. I teach student loan basics and promote responsible lending while encouraging student success. I feel hopeful when I come across so many others that are passionately and tirelessly working to promote economic security for our future generations. I’m proud and honored to have been given this opportunity and to be part of a dedicated team at the DFPI and that the DFPI is committed to current and future borrowers by protecting their rights and working hard to make education a force for equality that builds wealth for all Californians.

DFPI Student Loan Resources

The DFPI encourages student loan borrowers to learn all they can about their loans and prepare for repayment. Check out the Back on Track website for the most up to date information on student loans and your options to minimize the impact or your loan on your life. Californians with federal and private student loans have special protections provided by the Student Borrower Bill of Rights. If you are having an issue with a loan servicer, or think you’ve been the victim of a scam, contact the DFPI toll-free at (866) 275-2677 or or File a Complaint online. If you have any questions about your rights, servicer, or are unsure if you should file a complaint, contact the DFPI’s Student Loan Servicing Ombudsperson, Celina Damian, at

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Last updated: Mar 15, 2023 @ 2:07 pm