Planet Money Indicator: NPR




Aniya Morina discovered psychology in high school.

ANIYA MORINA: I fell in love with it and just learned how the brain works and how, for example, people work and everything and why they do the things they do.

WOODS: So Aniya got her bachelor’s degree in psychology. And she now works as a case manager with homeless youth in Baltimore.


But the salary is not that high. She really wants to become a licensed therapist working with children – a solid professional job. But for that, he needed a master’s degree. So she decided to go back to school in the evenings and on weekends. And a few years into the program, his combined undergraduate and master’s student debt soared to $128,000.

MORINA: I really don’t think I’ll be able to afford that after I graduate. I don’t think I have any choice but to default.

WOODS: I mean, it’s a really big decision, isn’t it? – because a default could affect your credit and your ability to apply for loans.

MORINA: Everything, everything – it affects everything.

WONG: Aniya faces one of the most difficult dilemmas of her life. And it’s a dilemma that many other black students like her face because black borrowers aren’t repaying their student loans at up to about three times the rate of white borrowers.


WOODS: And I’m Darian Woods.

No one wants to default on what they owe. But according to one estimate, 2 in 5 black borrowers will not repay their student loans after 12 years. Today’s show – what causes black student loan defaults?


WOODS: When Aniya Morina first explored master’s degree programs in psychology, she knew she wanted an online school. Aniya had a full-time job and she wanted classes that could bypass that. She saw a listing that Capella University was among the best online schools. It’s a for-profit university and the website seemed to be for it.

MORINA: You’re not used to seeing a black woman or an Asian woman, for example, on the front page. And when I saw that, I was like, oh, okay, you know, they’re a little different. These are things, you know, that we are not used to seeing.

WONG: There was a form to put in your name, email and phone number if you wanted to know more. And then all these random phone numbers started calling her.

MORINA: They were heavy on it, yes. And, you know, it was like somebody called from Capella, and they just wanted to talk to me for a bit. So I said, oh, my God, whatever. So I finally called him back, and he was, like, really nice and stuff, just telling me all the good things, you know, about Capella University, you know, how they’re accredited, they have residencies and all. Like, just a lot of people would help you through this.

WOODS: The guy talked about potential scholarships, how she might end up in two years. And finally, Aniya was like, yeah. I mean, they want me. I want the diploma. The website seems to imply that the program is affordable. But, of course, she has to collect the money first.

WONG: Aniya says borrowing from her family was out of the question and she didn’t get any of these scholarships in the end. So Aniya borrows about $20,000 for the first year, adds it to her $40,000 undergraduate student loan. She is completing her first year courses. Everything is fine. But at the end of her second year, Aniya is way behind where she wanted to be. She realizes there are all these extra classes she has to take. She looks at the barrel of having to shell out for a third year. And now his total student debt has soared to $128,000.

WOODS: You expect to pay them back in the next 10 years here?


WOODS: That’s right.


WOOD: Why not?

MORINA: I don’t think I will have the money to pay them. And on the salary I earn as a case manager, no, no. Like, what if I finally get my license, you know, that takes time too.

WOODS: Aniya wonders when she can even finish that mastery. And she is seriously thinking about defaulting.

DOMINIQUE BAKER: As I read it continued to be a theme. And so I thought, well, I’ve learned more about this. What is happening here?

WONG: Dominique Baker is a professor of educational policy at Southern Methodist University. And Dominique breaks down the reasons black borrowers are more likely to default on student loans into three main categories — before, during, and after college.

WOODS: So before college, black students are more likely to grow up in a neighborhood that doesn’t have as many resources for school and has more pollution like smog from a highway or lead in the car. ‘water.

BAKER: Those areas are more likely to be close to where black and brown people live. Physically unsafe areas for people – these things are directly causally linked to student success in schools.

WONG: And so when it comes to applying to college, black students are less likely to get into well-endowed colleges that can offer more scholarships and financial aid.

WOODS: One particular type of college that black students are more likely to go to are so-called for-profit colleges, like the one Aniya applied to. It could be a trade school for something like cosmetology, or it could be an online university offering bachelor’s degrees.

BAKER: For-profit institutions, which are usually the institutions with the fewest dollars to try to help students afford to attend, these institutions frequently serve black students and black women who are trying to find more economical stability in their life.

WOODS: Just listen to this commercial.


TYRA ANDRE: I had to juggle being a single mom and working full time. I just needed to fit in school where I could fit in.

My name is Tyra Andre and I am delighted to announce that I have just obtained my MBA at Capella University.


WOODS: For-profit colleges have come under a lot of criticism for their recruitment. Fifteen for-profit colleges were cited by the Government Accountability Office in 2010 for making misleading claims to potential applicants. And although Aniya’s college, Capella University, was not part of this sweep, Capella faced similar criticism. In April of this year, Capella University settled a class action lawsuit alleging the university lied about its graduation rate and how long it took him to graduate. Capella settled this through private mediation. We asked Capella to comment. They did not answer us. But at the time, Capella said in a statement that the lawsuit was without merit.

BAKER: Advertising that’s done exceptionally well helps entice black people, and black women in particular, to enroll in institutions that aren’t necessarily very affordable for them and aren’t necessarily profitable.

WONG: And once a student has chosen where to enroll — perhaps at a for-profit university — borrowing from family is generally more difficult for black students. Intergenerational wealth is much lower for black families.

WOODS: This wealth gap stems from the legacy of slavery and segregation. Also, the GI Bill after WWII – it gave veterans free education and cheap mortgages. But in some states, black veterans couldn’t get those benefits. And now, black families face higher incarceration rates and still face discrimination in the job market. Less family wealth means more student loans.

WONG: So it’s even before a black student gets into college. And once the student is there, the inequalities persist. So, an example – major selection. Your major matters for how much you are likely to earn and how easy it will be for you to pay off your debt. More lucrative majors like, say, engineering can be expensive or require a higher SAT score.

WOODS: And the cards are still stacked against black students even after they graduate.

BAKER: We have some really good research that shows black people with college degrees are still treated differently than white people with college degrees when it comes to the job market.

WOODS: And upon repaying your loan, depending on your circumstances, you may qualify for debt relief or restructuring. But that means expecting yes when you pick up the phone and ask. Dominique says black borrowers on average will be less likely to do so.

So you add up these constellations of factors before, during, and after college, and it becomes clear why black borrowers are more at risk of defaulting on their student loans.

WONG: As for Aniya, she’s in limbo right now. She wants to finish her master’s degree, but she’s not sure she will.

WOODS: What advice would you give yourself a few years ago?

MORINA: Don’t.

WOODS: Oh, wow.

MORINA: Don’t. I just wish I had done more research, more research, more research.

WONG: Dominique says this is where public policy should step up. The government should do more research on behalf of students. It should more closely monitor for-profit colleges and enforce the law so that anyone who enrolls in a college knows that it will meet basic standards.

WOODS: And on the larger issue of student debt, Dominique wants more effort to be put into designing policies that work for everyone.

BAKER: You kind of realize how politics is shaped for a specific type of student. And if you deviate in any way from that typical type of student, it becomes really difficult.


WOODS: This show was produced by Jamila Huxtable with engineering by Debbie Daughtry. It has been verified by Kathryn Yang. Viet Le is our main producer, and he also edited this episode. Kate Concannon is editing the show. And THE INDICATOR is an NPR production.

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Garland K. Long