The Average Student Loan Debt By Race

Unlike many developed countries, the United States asks higher education students to pay tuition. That naturally creates disparities between people with the resources to afford school and those who require financial assistance to achieve their potential.

Wealth inequality along racial and ethnic lines affects individual prospects for higher education. Data from the Federal Reserve shows that Hispanic households own $251,000, African American households own $311,000 in average wealth, and white households own $1.365 million.¹

Pursuing higher education is a hallmark of the American Dream, but race impacts how society distributes the debt burden it places on students entering the workforce. Here are some illuminating statistics that explore the intersection of student loan debt with race and ethnicity in America.

Rising college costs and student debt burdens go together. According to the National Center for Education Statistics (NCES), the average annual tuition and required fees for an education at a four-year institution grew from $14,596 in 2010-11 to $20,727 in 2023. That puts the price of four years of school at more than $80,000 — not counting living expenses.²

In that environment, individuals now collectively hold nearly $1.8 trillion in federal and private student loan debt as of Q1 2025. To comprehend the size of that number, note that it’s more than the total American consumers held in debt for motor vehicles — about $1.56 trillion.³

Lower-income families have fewer resources available to send children to college. Average family wealth disparities between Hispanic, African American, and white families translate to structural disparities across the economy.

For example, while the top 10% of all households in the Federal Reserve data held $7.2 million on average wealth (67.3% of the total), the bottom 50% of households held $52,000 (2.4%).¹

We see those disparities play out in data for student loan debt broken down by race and ethnicity. On average, African American students who earned bachelor’s degrees owe $39,560 upon college completion — an amount more than $4,000 higher than the average among all degree recipients ($35,530).⁴

Other data suggests that even though gross differences in total debt according to race may appear small, disparities in average family worth result in much higher debt burdens for students of color.

For example, one Federal Reserve report based on a general survey of consumer finances shows white families earning an average median income of $81,100, while Hispanic and Latino families earned $46,700, and African American families earned $46,000. Predominantly Asian households, on the other hand, earned $122,600.⁵

Comparing total student loan debt data from the previous table with family median net worth in the Fed data establishes that Multiracial, African American, and Hispanic families have to do much more with less.

Fortunately, the federal government provides direct grant assistance for students struggling with student loan debt through the Pell Grant program, which awards direct grant assistance to those with a demonstrated need.

Other federal student aid grant programs include the Federal Supplemental Educational Opportunity Grant and the Teacher Education Assistance for College and Higher Education Grant.

The Iraq and Afghanistan Service Grant awards students whose parent or guardian served in the U.S. armed forces and died as a result of performing military service in Iraq or Afghanistan after the events of 9/11.⁶

The need is evident, given that 57% of African American and 46% of Hispanic undergraduate students are Pell Grant recipients.⁷

The racial wealth gap results in fewer college students of color having enough resources to pay their way without student loan support. As the percentages in the previous two tables attest, those students are burdened coming out of college with additional financial responsibilities they may not be able to handle.

For various reasons, Hispanic students tend to borrow less when they go to college. For example, they tend to stay in school longer because they seek to balance school with work. However, Hispanics face disproportionate challenges in paying off the debt they owe.⁸

A key factor in examining the intersection of race and student loan debt is what happens after students graduate and get out on their own.

Because degree-seeking students don’t pay back loans while in school, the impact of student loan debt on a person’s income takes place after they find employment and start earning.

Student loan debt — and its role in a borrower’s debt-to-income ratio — is a significant hurdle to saving for a down payment on a home or to qualify for a mortgage.⁹ It also negatively correlates with entrepreneurship.¹⁰

Compared with Latino, Hispanic, and African American borrowers, white recipients have defaulted on their student loans over the past 20 years at significantly lower percentages.¹¹

We already know from the above data on the high percentage of African Americans and Hispanics who are Pell Grant recipients that lower-than-average family wealth contributes to the necessity of student loan debt.

What’s interesting about the following insight is that Pell Grants and other financial aid grants do not adequately compensate for that. Students most likely to receive Pell Grants are also most likely to have unmet financial need related to their education, according to a 2023 data analysis by the Institute for Higher Education Policy.

On average, compared to white students, American Indian or Alaska Native, Asian, African American, Latinx or Hispanic, and Native Hawaiian or Pacific Islander students experienced a higher gap between total tuition and non-tuition expenses and available grant aid and family resources.

Among Pell Grant recipients, 90% had unmet need, compared to 56% for non-Pell Grant recipients. Unmet needs along racial lines fell along familiar patterns.¹²

The difficulty in repaying student loans varies according to race and ethnicity, but the good news is that the students struggling the most also seem to be improving at higher rates than the majority.

These numbers reveal that people want to repay their debts.

We’ve already seen in the section on student loan debt per month that Hispanics tend to borrow less because they may tend to stay in school longer and combine education with job responsibilities. These challenges continue once Hispanics leave school.

However, the relatively rapid decrease during the pandemic in loan delinquency rates among African Americans and Hispanics signals something positive in the student debt landscape, where racial and ethnic differences express the racial wealth gap and point to chronic disparities.¹³

The best source of tools and resources to understand and plan for student loan debt and monthly payments is Federal Student Aid, America’s largest student financial aid provider.

We used the Loan Simulator at Federal Student Aid to compute monthly loan payments. We assumed students were on standard repayment plans and paying over 10 years at current interest rates for direct subsidized undergraduate and graduate loans. We assumed the goal was to pay the lowest total amount over time.

Average Student Loan Debt Per Month
Average Student Loan Debt by Degree
Average Student Loan Debt by Year
Average Student Loan Debt by State
Average Student Loan Debt by Generation
Average Student Loan Debt by Age

¹ https://www.stlouisfed.org/community-development/publications/the-state-of-us-household-wealth
² https://nces.ed.gov/programs/digest/d23/tables/dt23_330.40.asp
³ https://www.federalreserve.gov/releases/g19/HIST/cc_hist_memo_levels.html
⁴ https://nces.ed.gov/programs/digest/d23/tables/dt23_331.95.asp
⁵ https://www.federalreserve.gov/publications/files/scf23.pdf
⁶ https://studentaid.gov/understand-aid/types/grants
⁷ https://educationdata.org/pell-grant-statistics
⁸ https://www.cnbc.com/2023/10/02/latino-student-loan-borrowers-face-extra-challenges-as-bills-restart.html
⁹ https://www.bankrate.com/loans/student-loans/student-loans-affect-buying-a-house
¹⁰ https://www.tse-fr.eu/sites/default/files/TSE/documents/sem2023/jobmarket/morazzoni_marta_jmp.pdf
¹¹ https://www.pewtrusts.org/en/research-and-analysis/reports/2024/12/the-student-loan-default-divide-racial-inequities-play-a-role
¹² https://www.ihep.org/college-affordability-still-out-of-reach-for-students-with-lowest-incomes-students-of-color
¹³ https://www.federalreserve.gov/publications/files/2023-report-economic-well-being-us-households-202405.pdf