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Americans have long looked to college education as a way out of poverty and into the middle class. But a new study by the UNC Center for Community Capital reveals that soaring levels of debt among college students, particularly low-income minority college students, threatens to undermine the economic benefit of this key wealth-building tool.

“People are doing what they’ve been told to achieve the American Dream but finding their aspirations dashed by college debt,” said Mark McDaniel, senior research associate for the center, who leads the study team. “Our challenge is to find ways to ensure that a college education continues to serve the critical role of helping people at all social and economic levels build wealth and financial security.”

The study, “The Reality Education and Assets Partnership: Making the Case for Student Financial Management Programs at Minority Serving Institutions,” analyzed data from numerous national studies on college students and debt and compared it to the experience of students attending five N.C. colleges that serve large minority populations. North Carolina’s historically black colleges and universities (HBUCs) posted the highest level of student debt ($121 million) of all U.S. states’ HBCUs in 2006.

Researchers conducted online surveys and found that, among respondents:

  • An overwhelming number (80 percent) use federal college loans to finance their education.
  • A large number (40 percent) come from families earning less than $45,000 a year and are the first person in their immediate family to attend college.
  • A surprising number (91 percent) have provided some type of financial support to their families while they are in college; most frequently to help pay utility bills, basic living expenses and rent or mortgage payments.
  • Few students (22 percent) who received college loans have participated in a financial education course.
  • A large majority (77 percent) said they would enroll in a course dealing with personal finances.

“These findings show the financial weight that falls on the shoulders of these students who seek a college degree in hopes of securing a brighter financial future,” McDaniel said. “We believe that intervening at the college level can transform their future prospects. It’s in our state’s and nation’s best economic interests to help them do that.”

The REAP study, funded by a grant from the Jessie Ball duPont Fund, is the first part of a three-part initiative envisioned by the center to develop a comprehensive, sustainable financial education program at selected minority-serving institutions that can serve as a model for universities across North Carolina and beyond.

The UNC Center for Community Capital is the leading center for research and policy analysis on the transformative power of capital on households and communities in the United States. Part of the College of Arts and Sciences at the University of North Carolina at Chapel Hill, the center offers data and analysis that helps policymakers, advocates and the private sector find sustainable ways to expand economic opportunity to more people more effectively. For more information, visit or call (919) 843-2140.

Topics(s): Economic Mobility, Voices of Student Loan Borrowers
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