The amount of student loan debt in the United States is $1.8 trillion — and counting. Education has never been more expensive.
The student loan crisis has affected a lot of students, but statistics show that it disproportionately affects the Latino community.
Around 72% of Latinx students take out loans to attend college, compared with 66% of white students, according to a 2020 study from the Student Borrower Protection Center, a nonprofit organization focused on ending student debt. The study uses the term Latinx, intended to be a gender-neutral way to describe the Latino community.
The study also found that 12 years after starting college, the median Latinx borrower still owes 83% of their initial student loan balance while the median white borrower owes only 65% of their original balance.
This disparity can be attributed to a number of reasons including the lack of knowledge of the financial aid system, fear of accumulating more debt or the lack of support experienced during college and beyond.
Why Latino students are afraid of debt
UnidosUS and the University of North Carolina's School of Law conducted a survey of Latino students who began but didn't complete a college degree. One of their findings is that those Latino students who grew up in economically vulnerable communities see college debt as a financial burden that can impact their family's financial security and stability.
Amanda Martinez, senior policy analyst for the education policy team at Unidos, who worked on this report, said, "A lot of respondents said, I saw my cousin or I saw my sister try to go to college but then racked up debt and maybe didn't complete their degree and then still had that debt, so I'm just afraid to enter into that same journey."
This fear of accumulating debt and therefore having it impact their families can lead to two major outcomes, according to Vanessa Sansone, assistant professor of higher education at the University of Texas at San Antonio. She referred to those major outcomes as students choosing not to go to college or changing where they go according to what is affordable.
Kaitlyn Fikaris, a recent 2021 graduate from SUNY Purchase, who studied journalism with a psychology minor, experienced this firsthand. Originally Fikaris was supposed to go to Penn State and realized the summer before she was supposed to move in that it wasn't affordable.
"We kind of realized we were in over our heads. We went to the bank to try to take out some loans, but as an 18-year-old I had no credit, my mom didn't have good credit, and we weren't able to take out the loan," said Fikaris.
Lack of knowledge about the financial system
Being able to afford college is a defining factor in many Latino families across the country, and it's sometimes the lack of knowledge about the financial system that can make this topic even more complicated.
Dally Matos, a graduate student at Columbia University pursuing a master's degree in social work, said everything she knows has been through her own research.
She was first introduced to student loans while attending the Educational Opportunity Fund summer academy right before the start of her freshman year at Monmouth University. Matos said that one day as part of their programming, they had to sign loan documents and she was very confused. She said, "I was supposed to put down a co-signer, and I didn't know who to put down. I put down my grandma. Hopefully I live long enough so she won't have to pay off my loans."
For Matos, her loans were always something she worried about and although she tried to save up as much as she could, it was nearly impossible as she had other necessities to cover, such as groceries, gas, and campus fees.
Although she was always told there are private scholarships and outside funders, she couldn't apply to those due to the limiting time constraints she was facing in her everyday life.
"It assumes that I don't have to work two jobs in my undergrad and take 18 credits and do extracurriculars," Matos said. "It assumes that I have free time and the ability to apply to these scholarships. I had to go home every single weekend to take care of my mother. I wanted to, but I couldn't."
In fact, her fear of accumulating more debt almost kept her from going to graduate school. She asked herself if it was worth it and if she was ever going to be able to pay back this money. Ultimately, she decided that having a master's degree would only help her.
Between her undergraduate and graduate programs, Matos will graduate owing around $85,000 in student loans.
Jessica Jacho, currently taking a gap year, owes $30,000 under her dad's name, and as for federal student loans, she owes around $27,000.
Jacho was in her junior year studying biology with a double minor in psychology and Spanish, when she was forced to drop out. "I lost a grant by the state, and the school told me I had to pay the rest of the amount that I owed, which was close to $6,000. If I didn't pay that by a certain date, then I couldn't attend the spring semester, which therefore I didn't."
Her father, who has suffered multiple heart attacks, has been helping her pay some of her loans, but Jacho is working four jobs to help take that load off her dad.
"It's stressing me out too much to the part where I just can't sleep," she said.
Sandra Ocampo, a fifth-year student at the University of California, Los Angeles, double majoring in communication and sociology, is an undocumented student who struggled to find out what aid she qualified for. As a DACA student, she is only allowed to take out a loan called the Dream Loan under the Dream Act in California. And that loan is capped at $4,000 per year.
"Being an undocumented student plus a first-gen makes a recipe for not understanding what financial aid is, and I think that was definitely apparent with me not receiving financial aid even though I was eligible during community college," Ocampo said. "It was really just myself being proactive and educating myself on these financial matters because if not, I don't think anyone else would've helped me since no one in my family has previously gone to university or filled out an application."
Yanely Espinal, director of educational outreach at NGPF.org said a lack of support — especially in the Latino community — is a very big issue.
"We're really relying on essentially saying, please help me, give me some of your time, help me fill out my FAFSA, explain to me what are the ways to funding college, and that's a very difficult thing to continue to do over and over again."
Worries about repaying student loans
For many students in this community, it's finding the way to pay for these loans after graduation that causes worry and stress.
"I'm constantly going to be living in the shadow of my debt," Matos said. "My parents are getting older and they've sacrificed so much for me, and I'm worried that my payments are going to be so large that I won't be able to give them back even one-tenth of what they've given me."
Jacho has a plan set in motion as to how she is going to tackle her debt, making $25 to $100 payments to start paying off the interest, so that way she can begin lowering her principal. If everything goes well, Jacho believes she'll be debt-free in about five to 10 years. She hopes she will be accepted again into Monmouth University for the spring semester — her application is currently under review.
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Ocampo hasn't put a lot of thought into the repayment of her loans and is hoping to get a full-time job that would pay her enough to make those payments.
"That hasn't happened yet and it's kind of stressing me out," Ocampo said. "I just left it all for the future, and future me is going to have to deal with it."
Hope for student loan forgiveness
When the Covid-19 pandemic first hit in March 2020, the government put a pause on student loan payments and waived interest charges, with the most recent extension being until Jan. 31, 2022. For many students this has been a relief as it has provided them with a couple of extra months to save up and plan.
Student debt forgiveness has also been a huge topic of discussion under President Joe Biden's term. He repeatedly promised to cancel at least $10,000 of the loans for all — but it hasn't happened yet. Most recently, another disappointment for many was the exclusion of student loan forgiveness from the Democrats' $2 trillion spending bill.
"That would mean everything," Fikaris said. "I'm not expecting all of my loans to get forgiven but at least with $10K that the president campaigned on would be a great help."
Jacho agreed that student-loan forgiveness would help take a "huge load off [her] chest."
Martinez and Espinal both said that forgiving $10,000 would be very beneficial but something else needs to happen.
"We need to have a comprehensive plan that looks at both affordability together with some debt cancellation and improving the current repayment plans of the federal government," Martinez said. She added that a solution for the affordability portion would be to double the Pell grant which would allow for those nontuition costs to be covered.
Espinal added that cancellation needs to happen for outstanding debt but something needs to change in the legislation so that this cycle of debt doesn't repeat itself in years to come.
A lot of this issue surrounding debt and student loans is the lack of education and support surrounding this topic.
Sansone said universities should have financial aid offices that are "empathetic, understanding, caring and patient while also having the capacity to support families, particularly Latino families, which also includes having individuals who speak Spanish."
If a college or university lends a student money, Espinal said, there should be a required course attached to it in order to receive that loan.
"If they are lending you money, they benefit from the interest that you will pay them, but they also have to be responsible for educating you about borrowing money from them," Espinal said.
Matos proposes that there should be a class or session during freshman orientation for students to hear from those who have student loans, who are paying it off and financial aid counselors.
"I think there needs to be more education around student loan policy and repayment plans, and not just dismiss it as something that you have to do to go to college," Matos said.
Advice to navigate loans
Managing student loans for Latino families and students can be extremely difficult, but experts offer these few 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 you need, so 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 it's just $10 or $15 a month — to start getting rid of the accrued interest in your student loan account.
- Start investing and saving money at an early age. "Opening a 529 savings plan or even just a brokerage account where every single month or every few ones you're consistently adding money to that account and allowing it to grow, it has a very high chance of growing over 10, 15 or 20 years," Espinal said.
- Evaluate the terms of your loan. If your monthly minimum payment required is very high, change your student loan plan and go with the longest term available.
- Pay extra on your loans. After covering your necessities, 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 save you money on interest.
CNBC's "College Voices″ is a series written by CNBC interns from universities across the country about getting their college education, managing their own money and launching their careers during these extraordinary times. Denisse Quintanilla is a senior at Monmouth University studying Spanish and communications with a concentration in media studies and production. She is currently an intern at CNBC en Espanol, writing scripts for Informe CNBC, while also translating and producing videos to Spanish for Telemundo. The series is edited by Cindy Perman.
Latinx is a recently coined term intended to be a more gender-neutral way of describing members of the Latino community, but it has not been widely embraced by the community. Latino is used here unless Latinx is specifically referenced by a person or entity.