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The story of financial inequality in the U.S. has many chapters on the different ways Black Americans suffer disproportionately. Whether it’s net worth, homeownership, income or some other factor, Black consumers often face challenging barriers to financial stability and wealth building.

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While the student debt crisis has impacted entire generations’ ability to hit historically “normal” life milestones like getting married and having children, it continues to impact Black borrowers more. Not only do Black students borrow 35% more on average in student loans than their non-Black peers, but Student Loan Hero researchers found that Black millennial bachelor’s degree-holders earn 22% less than non-Black grads.

Key findings

  • Black millennials with a bachelor’s degree earned less on average than other degree-holding millennials. Black millennials earned 22% less on average in 2019, outpacing their peers in just three states — Oregon, Maine and Alaska.
  • The earnings gap for recent graduates widened in more than half of U.S. states. From 2014 to 2019, the earnings gap for recent graduates ages 25 to 29 widened in 28 states and the District of Columbia. The gap widened by more than 29 percentage points in Vermont, most of any state.
  • Black students borrowed more in student loans than their fellow students. At four-year public schools, Black students and their families borrowed 35% more, on average, in the 2015-2016 academic year (the latest available data). Non-Black families contributed an average of $14,434 to their student’s education, more than double the $5,545 Black families contributed.

After graduation, Black millennials with a bachelor’s degree earn significantly less on average than their equally educated peers

As more jobs and industries began requiring bachelor’s degrees over the past few decades, the American zeitgeist has increasingly emphasized the idea that a college education is any student’s ticket out of poverty, low wages and an otherwise less-than-comfortable lifestyle.

The data shows a different story — particularly for Black students. Despite earning that invaluable bachelor’s degree, Black millennials — those ages 23 through 38 in 2019 — working full time throughout the year earned 22% less ($44,498 versus $56,731) than their comparably educated and employed peers. That percentage represents an income gap of more than $12,000.

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Black millennials out-earned their non-Black peers in just three states, but the difference is minimal. Oregon, Maine and Alaska each recorded higher average earnings for Black millennial graduates than other workers, but only by an average of 2% — or roughly $1,200.

Black millennials out-earned their non-Black peers in just three states, but the difference is minimal. Oregon, Maine and Alaska each recorded higher average earnings for Black millennial graduates than other workers, but only by an average of 2% — or roughly $1,200.

 

Worst wage gap leaves Black grads with half of peers’ earnings

Student Loan Hero researchers found the worst wage gap for Black millennials was in Montana, where Black bachelor’s degree graduates working full time earn 50.3% less on average than non-Black workers. The $22,466 average income for Black bachelor’s degree-holders in Montana falls significantly short of the $44,632 that other grads take home.

Montana’s wage gap stands as a bit of an outlier. The next largest racial wage gap for millennials crops up in South Dakota, where Black earners take home 35.8% less, on average, than their peers — a bit closer to the average earnings gap of 31% among the 10 states with the most significant disparities.

The 10 states with the widest earning gaps for Black millennial bachelor’s degree-holders
Rank State Average earnings, Black millennials Average earnings, all others Gap ($) Gap (%)
1 Montana $22,166 $44,632 $22,466 50.3%
2 South Dakota $28,980 $45,117 $16,137 35.8%
3 Rhode Island $33,424 $51,610 $18,186 35.2%
4 Vermont $31,447 $45,733 $14,286 31.2%
5 District of Columbia $52,769 $74,602 $21,833 29.3%
6 South Carolina $36,194 $49,861 $13,667 27.4%
7 New Jersey $47,841 $65,104 $17,263 26.5%
8 Kansas $37,297 $50,675 $13,378 26.4%
9 Delaware $40,886 $55,216 $14,330 26.0%
10 New York $51,163 $68,754 $17,591 25.6%

Get the rest of this article at Student Loan Hero.com.

 

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