African-American and Latino students tend to borrow more to finance their education, attend more expensive for-profit colleges, and default on their loans more frequently, a Consumer Financial Protection Bureau entry says. Part of the problem arises from the effect that the recession had on these communities and the slow rate at which they have recovered, according to authors Aissa Canchola and Seth Frotman.
The blog cites a recent study that revealed 90 percent of African-American students and 72 percent of Latino students leave school with student loans, as opposed to 66 percent of white students and 51 percent of Asian-Americans. Student loan debt can perpetuate income inequality by making it harder for students to invest in their future. This can reduce the lifetime wealth of minority communities, the bureau says.
More than 25 percent of borrowers are behind on their federal student loan payments, the CFPB says. There even is evidence of “higher rates of student loan defaults and delinquencies in ZIP codes populated primarily by minorities with higher income levels.”
The blog emphasizes that the bureau wants to hear from borrowers who are having difficulty with their student debts and that all federal student loan borrowers have the right to an income-based repayment plan.
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