The System Is Rigged: Student Debt and the Racial Wealth Gap

New report highlights link between structural racism in America and racial disparities in higher education; calls for new progressive student debt policy proposals

New York, NY— Today, a new report co-released by Demos, The Century Foundation, and The Roosevelt Institute, Bridging Progressive Policy Debates: How Student Debt and the Racial Wealth Gap Reinforce Each Other, explores the connections between America’s persistent racial wealth gap and our crippling $1.6 trillion student debt crisis. Compiling research on racial disparities in student debt and higher education outcomes for Black vs. white Americans, the report underscores the structural inequalities and discrimination that shape every step of students’ of color experience, both in college—from paying for college to accessing academic opportunities—and in the job market after leaving school with or without postsecondary credentials.

The report explains how student debt and the racial wealth gap are mutually reinforcing: lack of wealth requires Black borrowers to take on far more debt than their white peers and puts them at greater risk of default. This vicious cycle is directly contrary to the assumptions underlying the policy choice to use individual debt to finance higher education: namely, the notion that increased education is a primary way to close economic gaps between Black and white Americans. The report concludes by calling on progressive policymakers to institute new policies that address student debt with a racial lens.

Key Findings from the Report:
  • In order to finance higher education, Black families—already disadvantaged by generational wealth disparities—rely more heavily on student debt, and on riskier forms of student debt, than white families do;
  • The additional risks Black students face when taking on student debt are exacerbated by other disparities in the higher education system, including predatory for-profit colleges that engage in race-based marketing; and
  • Due to lower family wealth and racial discrimination in the job market, Black students are far more likely than white students to experience negative financial events after graduating—including loan default, higher interest rate payments, and higher graduate school debt balances.
Insight from the Authors:

“For too many years, the racial segregation that determined Black students’ access to higher education went largely unacknowledged by policymakers. Within today’s higher education finance structure, Black students are less able to pay for—and enroll in—college without loans, which also has major implications on our economy,” said Jen Mishory, The Century Foundation. “The research makes clear that moving away from a system so reliant on debt toward a public investment-financed system would be a significant benefit to Black families and to a more healthy and stable economy overall.”

“The relatively recent policy choice to ask individual students to access higher education through debt-financing has had a disproportionate impact on students of color,” said Suzanne Kahn, Roosevelt Institute. “Today’s policymakers have created a system where inequality, discrimination, and structural barriers for Black and brown people throughout the economy determine the cost and the scale of the ultimate financial pay-off of going to college. It’s time for policymakers to re-write these rules so that all students have fair and equal access to higher-education.”

“Too often in policymaking, we view the inequities in our current system as natural and inevitable instead of as the consequence of deliberate policy choices,” said Mark Huelsman, Demos. “The use of student loans to finance higher education is a choice that has exacerbated inequalities in our higher education system. Given its economic and social value, higher education should be treated as a public good. We must recognize that public investment can build a dynamic, well-rounded, innovative population that benefits all of us.”

Looking to the broader implications of this racial inequality, a Roosevelt Why This Matters, “If You’re Black in America, You’ll Pay More for College and Get Less,” reminds us that the structural discrimination in our economy starts well before college, and it definitely lasts well after graduation.


Demos is a dynamic “think-and-do” tank that powers the movement for a just, inclusive, multiracial democracy. Through cutting-edge policy research, inspiring litigation and deep relationships with grassroots organizations, Demos champions solutions that will create a democracy and economy rooted in racial equity. Our name means “the people.” It is the root word of democracy, and it reminds us that in America, the true source of our greatness is the diversity of our people. Demos’ work is guided by three commitments: Achieving true democracy by reducing the role of money in politics, amplifying the voice of the people, and guaranteeing the right to vote; Building pathways to ensure a diverse, expanded middle class in a new, sustainable economy; and creating progressive change with the partnership and leadership of on-the-ground organizations in communities of color. Learn more.

The Century Foundation

The Century Foundation is a progressive, nonpartisan think tank that seeks to foster opportunity, reduce inequality, and promote security at home and abroad. For over 100 years, TCF experts have sweat the details of policy in order to advance progressive change. TCF is based in New York, with an office in Washington, D.C. Follow the organization on Twitter at @TCFdotorg and learn more at

The Roosevelt Institute

The Roosevelt Institute, a New York-based think tank, promotes bold policy reforms that would redefine the American economy and our democracy. With a focus on curbing corporate power and reclaiming public power, Roosevelt is helping people understand that the economy is shaped by choices—via institutions and the rules that structure markets—while also exploring the economics of race and gender and the changing 21st-century economy. Roosevelt is armed with a transformative vision for the future, working to move the country toward a new economic and political system: one built by many for the good of all.

To keep up to date with the Roosevelt Institute, please visit us on Twitter or follow our work at #RewriteTheRules.