Jerard Paige, a junior economics major at Howard University, isn’t your typical college student. That’s because he not only is concerned about how much money he’ll owe when he graduates, he’s taking steps to eliminate his school debt and secure his financial future.
“I have been saving for the past six months, hoping to eliminate my student loan debt by graduation,” Paige said. “Once I pay off my debt I will look into investing in appreciating assets. But right now, my focus is on depleting my liabilities so I can spend money to make money.”
Many students, especially African Americans, aren’t in a position to pay off their school loans before they graduate. A new study by Prudential Financial, Inc. shows that college-educated African Americans are twice as likely to attain student loan debt compared to all college-educated Americans.
“Seventy three percent of college-educated African Americans feel ‘better off’ compared to the previous generation of their family,” says Benjamin Robinson, chief administration officer for Prudential Annuities. “College-educated African Americans are much more likely than the general population to be among the first in their family to have attended college (15%), to hold a professional or white collar job (28%), or to hold a management position (18%). With less wealth in the previous generation of their families, African Americans may face the prospect of having to pay a greater share of their own college expenses.”
Prudential found through its study, The African American Financial Experience, that African Americans are significantly more likely to have some type of debt (94%) compared to the general population (82%). Credit card, student loan and personal debt are all higher within the African American community compared to the general population.
Getting out of debt is not an overnight process, says George R. Barnes, a financial advisor at Prudential. “Once students graduate from college they need to focus on getting a job and do whatever they can to keep expenses low to pay off debt sooner,” says Barnes. “There is no way to prevent student loan debt from growing because it is attached to interest rates. With credit cards, students have the ability to control their payment plans.”
The study brings to light challenges of the African American community that can impact financial priorities.
In the study’s financial report card, African Americans gave themselves passing marks for knowing how to manage money, and even managing debt. But African Americans gave themselves low marks in financial literacy and building topics.
The African American Financial Experience is a biennial survey observing the financial progress and setbacks within the African American community. Prudential surveyed 1,153 Americans between the age of 25-70 who identify themselves as African American or black. To read more of the survey click here.
-The Prudential Insurance Company of America, Newark, NJ