Evidence now demonstrates significant variation in education-debt levels by race and household income, with Black and lower-income students accumulating higher levels of education debt compared to their White and upper-income peers. This study is one of the first to evaluate whether racial disparities in education debt extend to a low- and moderate-income (LMI) population. With data from a national sample of LMI households in the Refund to Savings study (N = 17.684), we employ a two-part modeling approach with a matching-estimator robustness check to estimate racial and ethnic variation in education debt. We find that significant disparities in education debt remain: the odds of student loan indebtedness are twice as high for LMI Black students as for White counterparts. In all, LMI Black students are estimated to incur $7,721 more in education debt than LMI Whites, with disparities persisting after graduation. These findings suggest that LMI Black and White students, who face similar liquidity constraints and borrowing risks, are at unequal risk of accumulating education debt. We conclude by discussing the implications of this research for asset-building policies and student loan repayment efforts, both of which offer promise in bolstering college affordability and easing the burden of education debt.
Project: Refund to Savings (R2S)