Report Finds HBCU and Hispanic Grads Pay More For Student Loans
Are Black and Hispanic students paying more for their student loans? According to a new report by the Student Borrower Protection Center (SBPC), they are.
The report, titled “Education Redlining”, says students of historically Black colleges and universities or those attending Hispanic-serving institutions were offered loans that cost thousands of dollars more than those who attended predominantly white collegiate institutions.
Released on February 12, the report looks at hypothetical comparisons of loan rates between students with nearly identical backgrounds who use Wells Fargo and Upstart, two consumer lending platforms.
"It seems apparent when you do the side-by-side comparisons that where this hypothetical borrower went to school mattered in terms of how Upstart measured their creditworthiness, and that to Upstart, there's a penalty for attending an HBCU or HSI," said Kat Welbeck, the civil rights counsel at the Student Borrower Protection Center, NBC News reports.
For example, the report explains that a hypothetical graduate from Howard University is charged nearly $3,499 more over the life of a five-year loan than a graduate of NYU.
Similarly, a hypothetical graduate of New Mexico State University, an HSI, is charged at least $1,724 more over the life of a five-year loan than an NYU graduate with similar background.
The SBPC, created to level the playing field in the student lending system which has traditionally locked communities of color out of mainstream credit markets urged Congress, federal and state regulators and the consumer lending industry to address the potential violations. Wells Fargo and Upstart both disagreed with the report.
According to NBC, both Wells Fargo and Upstart disagreed with the report’s findings.
"The study's characterizations ... do not reflect our lending practices and its conclusions are exaggerated," wrote Vickee Adams, senior vice president of corporate communications at Wells Fargo, in an emailed statement to the news outlet.
Diana Adair, Upstart's head of communications, called the report “inaccurate and misleading.” She responded with details from their own 2019 study with the Consumer Financial Protection Bureau that challenges the results of “Education Redlining.”
Regardless, Welbeck stands behind the legitimacy of the study saying the SBPC used data provided by Wells Fargo and Upstart to determine these findings, which they call “alarming” and continues to push for transparency from consumer lenders moving forward.
"Basing a person's creditworthiness on how ostensibly elite the institution they attended will perpetuate inequality and socioeconomic barriers," she told NBC. "We talk about using educational data as innovative, but this is redlining education.”
