Tag Archives: debt

The Finance & Tech Week In Review – 1/28/17


 

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Every Saturday the HBCU Money staff picks ten articles they were intrigued by and think you will enjoy for some weekend reading impacting finance and tech.

Black market medical record prices drop to under $10, criminals switch to ransomware / CSOonline ow.ly/Ke6T308r22i

Housing lets the iPhone 7 explore the seven seas / New Atlas newatl.as/2kCvvyX

Quail chicks learn their mother’s song in the egg / New Scientist bit.ly/2kbFKgs

Humans have created 30 trillion metric tons of stuff, from buildings to farms to ABBA albums / Science News ow.ly/g0vm308qYjy

Ikea’s refugee shelter declared best design of 2016 / New Scientist newatl.as/2jYB37Q

In #Madagascar, mobile phones allowed researchers to track increasing food insecurity in real time / World Bank wrld.bg/uftj308lLIC

Most People Are Financially Illiterate. Your Employees Don’t Need to Be / Inc. ow.ly/qG4r308qY5Q

3 Things to Know About Financial Planners. Prepare for your future. / FINRA bit.ly/2jeAtFF

Everyone wants economic growth. Starting young is key / WEF wef.ch/2kAoAub

This is how much you would have to contribute to pay off your country’s debt / WEF wef.ch/2j47Ho3

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90 Percent of HBCU Graduates Have Student Loan Debt


At the bottom of education, at the bottom of politics, even at the bottom of religion, there must be for our race economic independence. – Booker T. Washington

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A recent internal study by HBCU Money using data compiled by the Project on Student Debt paints a very grim picture for HBCU graduates. If one is to couple these results with the current financial demographics of income and wealth for African America as a whole it starts to beg the question if we did not put the cart before the horse. An educated African American population completely dependent on private employment controlled by other communities and copious dependency upon public sector jobs for which we ultimately have little control over. Historically, that argument is seeded in the debate between the philosophies of Booker T. Washington and W.E.B. DuBois. Washington believed that economic development should have occurred prior to development of the liberal arts within African America. Dr. DuBois favored agitation for social change and access to mainstream institutions. Parts of his philosophy would serve as a precursor to the integration movement a generation later that some would argue left African American institutions socially and financially crippled thereafter.

HBCUs served 99 percent of the African American population obtaining higher education prior to desegregation while today that number has dwindled to the neighborhood of 10 percent. This steady but rapid decline over the past 60 years has had long-term impacts on HBCU endowments not least among them the probability of producing high quality donors and large alumni populations. The latter being integral since only an average 13 percent of alumni donate nationwide. 13 percent of a small pool of alumni who have 50 times less wealth than the two leading diaspora groups in America did not and does not bode well for HBCU endowments closing the endowment gap. HBCUs losing 90 percent of their core demographic over the past 50 years has made its pool of alumni significantly smaller than it otherwise would have been and therefore indirectly had a significant impact on HBCU endowments. As a result, today’s education seekers at HBCUs are almost guaranteed to graduate with student loan debt and a significant amount of it while being expected to close the wealth gap despite only earning $0.46 for every $1.00 their Asian American counterpart earns. Unfortunately, many in HBCU leadership refused to adjust to this reality then and now – as we see in the continued chase of athletic budgets that could be going toward general student aid.

The results were paired against America’s 50 largest universities by endowment which surprisingly varied by geography, public and private status, and school size eerily similar to that of HBCUs. The Project on Student Debt reports that 66 percent of all college graduates will have student loan debt and average debt of that graduate is $26 600. Again, the number in parentheses shows the comparative results from the universities of the 50 largest endowments.

Median debt of HBCU Graduate – $28 786 ($21 713)

Proportion of HBCU Graduates with debt – 89% (46%)

Nonfederal debt, % of total debt of graduates – 8% (27%)

Pell Grant Recipients – 70% (17%)

These statistics show that HBCU students are 35 percent more likely to graduate with debt than the national average and 93 percent more likely to graduate with debt than someone from a school with a top 50 endowment. Unfortunately, there is no way to break out the African American student loan debt data of those attending those HWCUs which would help control for family resources playing an integral part in the difference. It is hard not to speculate that given top 50 endowments ability to provide more low-income based aid that the student loan debt is potentially lower for African Americans at HWCUs both in terms of percentage of those graduating with debt and how much debt. It should be noted though that these low-income students are usually academic overachievers and rarely run the academic gambit that HBCUs serve. Despite HBCUs on a whole being cheaper to attend, students are still finishing with 8 percent higher debt than the national average and 33 percent higher debt than those at a top 50 endowment institution. At first examination nonfederal debt (private loans) as a percentage of a graduate’s debt appears to be an HBCU advantage in that only 8 percent of HBCU graduates debt is composed of private loans versus 27 percent for those at a top 50 endowment institution. Further examination though suggest this is a result of family resources. African American families are less likely to have access to the capital and credit to secure private loans which can often be the difference between a student’s ability to stay in school and having to drop out for a variable amount of reasons. The lack of private debt has strong correlation between the institutional weakness of African American owned financial firms primarily banks and credit unions. Lastly, Federal Pell Grant percentage is a fairly direct reflection of the median net worth of African America which is last among all diaspora groups in America according to the latest Pew research.

We could spend years playing the blame game of why this situation is as it is. Unfortunately, African America does not have that kind of time. Student loan debt is fast becoming the current and upcoming generation’s means of separating the have and have not in terms of wealth and asset accumulation. A wealth gap that has grown from $85 000 to $237 000 over the past 25 years according to the Economic Policy Institute between African Americans and European Americans. The reality is that even if we could take student loan debt down to zero for our graduates the wealth gap would still be quite pronounced and an uphill struggle would exist. However, HBCUs can start to do their part by not making an already burdensome situation worse with more creative means of reducing student debt loads. An out of the box approach to this situation is needed and recognition that the African American financial situation is unique and more importantly in crisis. Mimicking the “American” higher education institutional strategy without taking into account the African reality is a recipe for disaster. Alumni, administrators, and our community must take up solving this problem because “education at any cost” is something we simply can not afford.

HBCU Money™ Business Book Feature – Debt: The First 5,000 Years


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Before there was money, there was debt

Every economics textbook says the same thing: Money was invented to replace onerous and complicated barter systems—to relieve ancient people from having to haul their goods to market. The problem with this version of history? There’s not a shred of evidence to support it.

Here anthropologist David Graeber presents a stunning reversal of conventional wisdom. He shows that for more than 5,000 years, since the beginnings of the first agrarian empires, humans have used elaborate credit systems to buy and sell goods—that is, long before the invention of coins or cash. It is in this era, Graeber argues, that we also first encounter a society divided into debtors and creditors.

Graeber shows that arguments about debt and debt forgiveness have been at the center of political debates from Italy to China, as well as sparking innumerable insurrections. He also brilliantly demonstrates that the language of the ancient works of law and religion (words like “guilt,” “sin,” and “redemption”) derive in large part from ancient debates about debt, and shape even our most basic ideas of right and wrong. We are still fighting these battles today without knowing it.

Debt: The First 5,000 Years is a fascinating chronicle of this little known history—as well as how it has defined human history, and what it means for the credit crisis of the present day and the future of our economy.