Student loans weigh heavily on black and Latino borrowers in North Carolina | DFA 90.7

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Reatna Taylor had big dreams of becoming a primary care physician when she entered Johnson C. Smith University. In 2015, she obtained a bachelor’s degree in biology. A partial scholarship covered most of her tuition, but she still had to take out $ 54,000 in student loans to cover all other expenses related to being a student.

Both of Taylor’s parents are from Panama. Because she was the first in her family to attend a four-year college, they didn’t understand how expensive it was going to be.

Reatna Taylor felt the brunt of her student loan debt. But she took advantage of the payment hiatus, allocating funds to be used for her family’s needs during the pandemic.

“I don’t think they understood how much college was either,” Taylor said, “because my mom set up a college fund for me and my brother, but maybe it was. be $ 2,400 when I graduated. “

Taylor continued his education at UNC-Chapel Hill, earning a master’s degree in public health. It cost him an additional $ 52,000 per year. By the time she graduated, she had accumulated $ 185,000 in student loan debt.

This was in part because she had paid tuition fees out of state and missed payments on previous loans. Because she had not consolidated them, her interest varied from lender to lender. This debt is part of the reason she put her dream of becoming a doctor on hold.

Taylor now works as a nutritionist for Mecklenburg County. She’s also a new mom currently on maternity leave, so she took advantage of the break on federal student loan payments to have more money to care for her family.

“It was like a huge relief not to have to think of, say, $ 1,500 more to go somewhere that could pay for other things we need,” she said.

The Department of Education suspended payments and interest on federal student loans at the start of the coronavirus pandemic. Borrowers do not need to register and will not be penalized if they miss payments. The recess was scheduled to end on January 31, but shortly after taking office, President Biden extended the deadline to September 30.

There is $ 1.5 trillion in student debt nationwide. North Carolina borrowers alone owe $ 44 billion, according to Rochelle Sparko, North Carolina policy director at the Center for Responsible Lending.

Sparko says North Carolina mirrors what’s happening in the United States, with black and Latino students borrowing at higher rates. Ninety percent of black students and 72% of Latino students nationwide take out student loans, compared to 66% of white students. Sparko says it’s because they tend to lack generational wealth to help pay for school.

“Due to the lack of intergenerational wealth, black borrowers start their careers at a disadvantage, tending to take on more debt,” Sparko said. “They face lower incomes than their white counterparts in the workforce, and therefore, their ability to repay their student loan debt may also be affected by institutionalized racism.”

In fact, the Student Borrower Protection Center, a consumer advocacy group, analyzed zip codes in major US cities and found that the median income of white households is at least 10 times greater than the median income of black and Latino households. , which makes white students more likely to receive help from their families to pay for school.

Once it’s time to pay off their loans, black and Latino borrowers have a harder time keeping up with their payments, especially if they live in communities of color. Black and Latino borrowers who live in predominantly black and / or Latino communities are five times more likely to default on their loans. Sparko says it may prevent them from getting a house, a car and even more business loans.

“In the case, for example, of P3 loans, which were intended for small businesses during the pandemic, if you had a student loan that you missed payments for, you might not have been eligible to get a loan to keep your business afloat, ”she said. noted.

This downward spiral is what Joshira Maduro worked hard to avoid. For eight years, she lived with her parents, on a tight budget, paying off her $ 132,000 in student debt.

Joshira Maduro 1.jpeg

Joshira Maduro graduated from Lehigh University with $ 132,000 in student loans. Today she paid almost $ 120,000.

Maduro graduated from Lehigh University in Pennsylvania with a degree in finance and marketing. She is the first in her family to attend a four-year college in the United States. Her mother is from Curaçao in the Caribbean and her father is from the Netherlands. He went to school abroad, where higher education was not as expensive. So when Maduro finished high school, she and her parents had no idea how to pay for college.

“His colleagues had children who were going to law school with $ 200,000 in debt,” Maduro said of his father. “And so to him he was like, ‘Okay, well, if you have to take a loan of $ 100,000, that just seems natural. You take six figures off the debt, as if that wasn’t uncommon.

Tuition at Lehigh was almost as high as at Harvard – nearly $ 55,000 a year in 2020 – but she fell in love with the campus after visiting while in high school. One of the reasons student debt is so high among black and Latino borrowers is a lack of financial literacy, experts say. Maduro says his family didn’t know federal loans were an option, so his father told him to take out a loan from a bank. With private loans, she was unable to take advantage of the pandemic payment freeze.

However, after eight years, she has paid off almost $ 120,000 of her student loans, increasing her payments from $ 1,300 per month to $ 500.

“Now I have a payment that doesn’t seem so emotionally draining to me every month,” Maduro said. “It still hurts to have so much money in debt for education that happened eight years ago, but it certainly doesn’t seem as emotionally intense.”

Although Maduro majored in finance, his loan customer service agents were some of his best teachers.

“I knew some of them by first name because eventually I would call around the same time and get them and they would say, ‘Oh, that’s a great question, actually. Here is what you can do, ”she said.

She took everything she learned and made a career out of it. Maduro now works at Lending Tree, helping others manage their credit card debt and personal finances. She says she makes a point of telling her clients that once they can reduce their debt to a point, they need to start investing in their future again.

Because making those personal investments will help them in the long run.

Additional resources for those who need help

GreenPath provides tips for managing your debt during the COVID-19 pandemic.

The Consumer Financial Protection Bureau offers information on how to take out a loan and advice on repaying it.

Calculate your payment options with the Federal Student Aid simulator.