Middle-class Latinx students are struggling to pay back student loans


A drawing of a graduation cap and tassel laying next to a stack of dollar bills and coins
(Lauren Schatzman | Daily Trojan)

A middle-class Latinx couple, both teachers, live in the suburbs with two young adult children.

Their total annual income is over $110,000; consequently, they face the obstacle of not qualifying to receive adequate financial aid for their kids who attend college. The couple’s daughter spent four years at UC Davis and amassed over $35,000 of debt and will take out even more student loans to get her master’s degree. Meanwhile, their son was granted a scholarship at USC but has still taken out over $2,000 in student loans. 

This scenario is far from uncommon.

Middle-class Latinx students are graduating with significant debt because of high education costs, inadequate alternative financial routes, and lackluster government interference.  

Latinx students make up only 20% of all Pell Grant recipients, and the average debt they gather is $30,000 for federal and private loans. The median borrower still owes 80% of their debt 12 years after graduating, and 40% of those who at least have an associate’s degree still report having significant student loan debt. Alarmingly, middle-class Hispanics are disproportionately lagging on student loan payments in comparison to their white counterparts. 

The main issue is that half of the Latinx students who attend universities are the first in their families. According to the Postsecondary National Policy Institute, first-generation students come from a lower-median income household and have more unmet financial needs than students whose parents attended college. Thus, these individuals are more likely to receive financial assistance from the school and government. 

While this may initially sound positive due to more people of a particular marginalized community being able to further their education, the reality is that many Hispanic families make too much money to qualify for a Pell Grant but not enough to afford tuition, room, and board without loans. 

One can argue that it is more efficient and affordable to go to community colleges, where Latinos can obtain an equivalent education at a higher-learning institution. But there still exists a stigma that community colleges are nothing more than the impoverished man’s path to higher education.

A researcher at the Vanderbilt University Law School found that people who graduated from non-selective institutions earn less than those who attended prestigious schools for their graduate and undergraduate degrees. Therefore, diplomas from costly schools such as UCLA, UC Irvine, or Claremont College may increase students’ credibility in the career sector.

Moreover, specific community colleges have been cutting classes since 2007 due to budgeting issues. In California, where the state government has recently cut funding in education, an estimated 2.5 million students will be out of the system for several years. As a state with the largest Latinx population in the country, more than 800,000 Latinx students could be cut off. Essentially, it is paradoxical to encourage students to attend community colleges while simultaneously cutting their budgets. 

To not take out an abundant amount of loans, students are encouraged to join organizations such as the USC Army Reserve Officer Training Corps, a program that can pay tuition — including room and board — for two to four years. 

However, ROTC is a physically demanding and mentally brutal institution that only rewards a handful of individuals with substantial scholarships and requires eight years of military service after graduation. Furthermore, a university could redact its financial aid to students if they receive scholarships from other entities, further complicating the preconceived notion that ROTC is a simple solution to the student debt crisis. 

Ideally, an executive order from President Joe Biden to forgive student loans is a proper solution to the debt crisis. Since his inauguration, Biden has canceled $1.5 billion for some borrowers, primarily those defrauded by their schools. 

However, there is a possibility that a future administration could overturn such decisions. This potential solution fails to acknowledge rising higher education costs — which facilitate thousands of new loans to students — and decreased funding for public post-secondary education that contribute to the student debt crisis in the first place. 

Student loan debt is taxing, but alternative solutions have their drawbacks too. Instead of cutting funding to education, state governments should allocate more money to community colleges and vocational schools.

From 2009 to 2012, the state of Montana achieved the country’s highest rate of graduates with college degrees in proportion to its population. This was due to increased investments into four specific sectors: the state’s two-year community college system, which allowed schools to freeze tuition; additional online courses for students who do not want to do on-campus learning; dual enrollment programs for high schoolers and access to academic transfer credits, which made it easier to move from a two-year to a four-year college.

As a result, students took out fewer loans and had more control over their education. 

Another option is to re-federalize the Student Loan Marketing Association, or Sallie Mae, which, under the watchful eye of the U.S. government, used to buy loans from the bank to lend more to students. A privatized Sallie Mae profited from government fees and paid colleges to sign up for their programs, forcing students to take out higher amounts of loans. They have since transferred their loan servicing operation to Navient, which overhauls 25% of all student loans in the country.

Ultimately, reforms must take place by a competent government to help middle-class Latinos alleviate their debt, and in the process, assist other Americans as well.