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Student loan debt in the US is skyrocketing. Why does it especially affect Latino students?

2021-12-21T22:43:12.604Z


About 72% of Latino students borrow to attend college, compared to 66% of white students. But ignorance of the financial system causes many to go into debt without finishing their studies.


Denisse Quintanilla -

CBNC

Student loan debt in the United States stands at $ 1.8 trillion, and it's growing.

Education has never been more expensive.

The student loan crisis has affected many students, but statistics reveal that it disproportionately affects the Latino community.

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About 72% of Latino students take out loans to attend college, compared to 66% of white students, according to a 2020 study by the Center for the Protection of Student Borrowers, a nonprofit organization focused on ending student debt.

The study uses the term Latinx, which is intended to be a neutral way of describing the Latino community.

The study also revealed that, 12 years after starting college, the average Latino borrower still owes 83% of the beginning balance on their student loan, while the average white borrower only owes 65% of their original balance.

This disparity can be attributed to a number of reasons including a lack of knowledge of the financial aid system, a fear of accumulating more debt, or a lack of support experienced during and after college.

Why Latino Students Are Afraid of Debt

UnidosUS and the University of North Carolina School of Law conducted a survey among Latino students who started but did not finish college.

One of their findings is that Latino students who grew up in economically vulnerable communities view college debt as a financial burden that can affect their family's financial security and stability.

Amanda Martínez, Senior Policy Analyst for the UnidosUS team, who worked on this report, explained: “Many of those surveyed said they saw their cousin or sister try to go to college, but then they ran up debt and perhaps didn't complete their grade and then they still had that debt, so they were afraid of getting into that same dynamic. "

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According to Vanessa Sansone, associate professor of higher education at the University of Texas at San Antonio, this fear of accumulating debt and, therefore, that it will affect their families, can lead to two results: that young people decide not to go to college. college or choose campus based on affordability.

Kaitlyn Fikaris, a recent 2021 graduate of SUNY Purchase who studied journalism with a specialization in psychology, experienced it firsthand.

Originally, Fikaris was going to Penn State and realized, the summer before his move, that it was not affordable.

Activists call on President Biden not to resume student loan payments in February and to cancel student debt, near The White House in Washington, DC, on December 15, 2021. Paul Morigi / Getty Images for We, The 45 Mill

“We realized that we were in trouble.

We went to the bank to try to apply for a loan, but since she was 18 years old, she had no credit and my mother did not have good conditions for it to be granted.

So we couldn't ask for it, ”Fikaris said.

Ignorance of the financial system

Being able to pay for college is a defining factor for many Latino families across the country, and sometimes it is a lack of knowledge about the financial system that can further complicate this issue.

Dally Matos, a Columbia University graduate student pursuing a master's degree in social work, said everything he knows has come from his own research.

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She first learned about student loans when she attended the Educational Opportunity Fund summer academy, just before starting her freshman year at Monmouth University.

Matos said that one day, as part of their schedule, they had to sign loan documents and she was very confused.

“I was supposed to put a co-signer, and I didn't know who to put.

I put my grandmother.

I hope to live long enough so that she does not have to pay my loans, "he explained.

For Matos, his loans were always something that worried him and, although he tried to save as much as he could, it was almost impossible since he had other needs to cover, such as food, gas, and campus fees.

Although she was reminded that there were private scholarships and outside funders, she was unable to apply due to time constraints in her daily life.

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"I'm not supposed to work two jobs in my undergraduate degree and take 18 credits and do extracurricular activities," Matos lamented.

“I am supposed to have free time and the possibility to apply for these scholarships.

I had to go home every weekend to take care of my mother.

I wanted to do it, but I couldn't, ”he added.

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In fact, her fear of running up more debt nearly kept her from going to graduate school.

He wondered if it was worth it and if he was ever going to be able to pay that money back.

In the end, she decided that having a master's degree would only help her.

Between his undergraduate and graduate programs, Matos will graduate with an estimated $ 85,000 in student loans.

Jessica Jacho, who is currently taking a year off, owes $ 30,000 on her father's behalf, and as for federal student loans, she owes about $ 27,000.

Jacho was in her third year studying biology with a double major in psychology and Spanish, when she was forced to drop out.

“I lost a scholarship from the state, and the school told me that I had to pay the rest of the amount I owed, which was about $ 6,000.

If I did not pay it by a certain date, I could not attend the spring semester, and therefore I did not do it, "he said.

Her father, who has suffered multiple heart attacks, has been helping her pay off some of her loans, but Jacho is working four jobs to help take that burden off his father.

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"It's stressing me out too much to the point of not being able to sleep," he explained.

Sandra Ocampo, a fifth-year student at the University of California, Los Angeles, with a double major in communication and sociology, is an undocumented student who had to struggle to find out what aid she qualified for.

As a DACA student, you are only allowed to apply for a loan called a Dream Loan under the Dream Act in California.

And that loan is capped at $ 4,000 a year.

“Being a first generation undocumented student is a recipe for not understanding what financial aid is, and I think that was definitely evident for not receiving financial aid even though I was eligible during community college,” explained Ocampo.

"I was myself being proactive and studying about these financial issues because if not, I don't think anyone else would have helped me since no one in my family has previously gone to college or filled out an application," she added.

Yanely Espinal, director of educational outreach at NGPF.org said the lack of support - especially in the Latino community - is a very big problem.

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“We depend on asking for help and time, to help us fill out the FAFSA and explain what the ways to finance college are.

And that is something very difficult to continue doing over and over again ”, he concluded.

Concern about repayment of student loans

For many students in this community, it is the way they pay these loans after graduation that causes concern and stress.

"I will constantly live in the shadow of my debt," said Matos.

"My parents are getting older and have sacrificed a lot for me, and I am worried that my payments are going to be so great that I will not be able to return even a tenth of what they have given me," he said.

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Jacho has a plan in place for how he is going to deal with his debt, making payments of $ 25 to $ 100 to start paying interest, so he can start reducing his principal.

If all goes well, you think you will be debt free in about five to ten years.

She hopes to be accepted back to Monmouth University for the spring semester.

Your request is being reviewed. 

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Ocampo hasn't given much thought to repaying his loans and hopes to get a full-time job that will pay him enough to cover those payments.

“That hasn't happened yet and it's stressing me out.

I left everything for the future, and in the future I will have to deal with it, "he lamented.

Hope for student loan forgiveness

When the COVID-19 pandemic first struck in March 2020, the government put a pause on student loan payments and waived interest charges, the most recent extension being until January 31, 2022. To For many students this has been a relief as it has given them a couple more months to save and plan. 

The cancellation of student debt has also been a big topic of debate during the term of President Joe Biden.

He repeatedly promised to pay off at least $ 10,000 of loans for everyone, but it hasn't happened yet.

Recently, another disappointment for many was the exclusion of student loan forgiveness from the Democrats' $ 2 trillion spending bill.

That would mean everything.

I don't expect all my loans to be forgiven, but at least the $ 10,000 the president campaigned with would be a huge help, "said Fikaris.

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Jacho agreed that the forgiveness of student loans would help take "a big weight off his shoulders."

Martínez and Espinal said the $ 10,000 forgiveness would be very beneficial, but something more needs to happen.

“We need to have a comprehensive plan that addresses both affordability and debt cancellation and the improvement of current federal government repayment plans,” Martínez explained.

He added that a solution for the affordability portion would be to double the Pell grant, which would allow for non-tuition related expenses.

Espinal pointed out that it is necessary to cancel the pending debt, but something must be changed in the legislation so that this debt cycle does not repeat itself in the coming years.

Much of this problem around student debt and loans is the lack of education and support around this topic.

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Sansone said colleges should have financial aid offices that are "empathetic, understanding, caring and patient and also have the ability to support families, particularly Latino families, which also includes having individuals who speak Spanish."

If a college or university lends money to a student, there should be a required course to receive that loan, according to Espinal.

"If they are lending you money, they benefit from the interest that you are going to pay them, but they also have to be responsible for educating you on the fact of borrowing money from them," Espinal said.

Matos proposes that there be a class or session during freshman orientation for students to listen to those who have student loans, those who are repaying them, and financial aid counselors.

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"I think there needs to be more guidance around student loan policy and repayment plans, and not just dismissing it as something you have to do to go to college," Matos said.

Tips for Navigating Loans

Managing student loans for Latino families and students can be extremely difficult, but experts offer these tips to make the process easier.

  • Talk to your family and your school

    .

    Sansone suggests having these conversations with your family and asking your school's financial aid office as many questions as possible so that you can make an informed decision.

  • Don't wait until after graduation to start paying

    .

    Espinal suggests that you start making monthly payments - even if they are only $ 10 or $ 15 a month - to start getting rid of the accumulated interest on your student loan account.

  • Start investing and saving money at an early age

    .

    "Opening a 529 savings plan or even just a brokerage account in which every month or every few months you are constantly putting money in and letting it grow, has a very high possibility of generating money for 10, 15 or 20 years," Espinal pointed out. .

  • Evaluate the terms of your loan

    .

    If the minimum monthly payment required is too high, change your student loan plan and go for the longest term available.

  • Pay extra on your loans

    .

    After meeting your needs, put extra money toward your loan payment.

  • Set up automatic payments by

    linking your checking account to your federal student loan portal - that can help you save money on interest.

    Source: telemundo

    All news articles on 2021-12-21

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