(Patrick Semansky/Associated Press)

A persistent racial wealth gap, waning investment in higher education and limited institutional resources are driving up the rate of borrowing at historically black colleges and universities, with 4 out of 5 undergraduates relying on student loans to finance their education, according to a new study from the United Negro College Fund.

“HBCUs serve a large percentage of students who have real and tangible financial strain, financial hardships,” said Krystal L. Williams, co-author of the study and senior research associate at UNCF’s Frederick D. Patterson Research Institute. “This is fundamental for truly understanding their borrowers’ behavior and borrowing practices.”

Researchers at the institute used the latest Education Department data and found that a quarter of students pursuing a bachelor’s degree at historically black schools borrowed more than $40,000, four times the rate of their counterparts at other schools. Even the median cumulative federal debt incurred by graduates of HBCUs was $26,266 in 2012, approaching the maximum limit for dependent students and 77 percent higher that the median debt burden of other federal borrowers, the report said.

What’s more, undergraduates at historically black schools frequently turn to Parent Plus loans, a federal program that has come under fire for high fees, minimal protections and saddling parents with debt they cannot afford. The Education Department’s decision to tighten lending standards for those loans in 2011 put the Obama administration at odds with some historically black schools that said the policy led students to drop out.

The administration relaxed the lending criteria, but the episode exposed the difficulties some African American families face accessing credit to finance higher education. More than two-thirds of HBCU students who received bachelor’s degrees in 2012 used a combination of federal and private loans to cover the costs, compared with 43 percent of students at other public and private nonprofit schools.

The vast majority of the nation’s 100 historically black schools have a fraction of the endowment wealth held by their historically white counterparts, leaving them with fewer dollars to fund scholarships and grants for cash-strapped students. Research by Marybeth Gasman, a professor of education at the University of Pennsylvania, found that many HBCUs simply receive less funding from foundations and corporations than other schools and contend with lower rates of alumni giving as a result of African Americans’ historic lack of access to wealth.

“Our institutions grant substantial amounts of aid, but HBCUs are a very underresourced sector of higher education,” said Cheryl L. Smith, UNCF’s senior vice president of public policy and government affairs.

High wages and family resources serve as buffers against the risk of borrowing, but in their absence, people with student loans can struggle to repay the debt, even small amounts. Barely 60 percent of HBCU borrowers in 2013 were making progress in paying off their student loans seven years after leaving school, compared with 85 percent of borrowers at other institutions.

UNCF researchers suspect socioeconomic inequality is contributing to the disparities in repayment rates. Nearly three-quarters of HBCU students receive Pell grants, a form of federal financial aid for families typically earning less than $60,000 a year. When those students fall on hard times, leaning on their families for financial support may be out of the question, Smith said.

“Many of our schools are also in the South, so a number of our graduates are in the South, where earnings are lower,” she said. “Our students are facing issues in the labor market, with underemployment and unemployment. They are facing greater challenges, so we need to take a step back and look at their loan burdens.”

Regardless of the type of college they attend, African American students as a whole are more likely to be saddled with education debt than whites. A joint study by liberal think tank Demos and the Institute for Assets & Social Policy at Brandeis University found that 54 percent of young African Americans between the ages of 25 and 40 have student loans, compared with 39 percent of their white counterparts.

That debt is exacerbating existing racial wealth disparities by making it more difficult for black families to save money and accumulate assets to cushion against economic turmoil. According to the joint study, the median household wealth is $3,600 for young African Americans, compared with just under $36,000 for young white households.

To save another generation of African American graduates from a similar fate, UNCF is urging policymakers to increase grant aid and work-study opportunities for students with financial need. The nation’s largest minority education groups is also calling on lawmakers to simplify the application process for federal aid and improve the servicing of loans to make repayment more manageable. Authors of the report say the pending reauthorization of the Higher Education Act offers an opportunity for Congress to ameliorate these problems.

“If we fail to address these policy concerns, then low-income students will continue to be heavily burdened with student debt,” Williams said.

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