As policymakers struggle to fund the government, millions of households face heightened uncertainty about student debt relief, grant programs, and safety net protections. During a shutdown, federal delays can deepen financial distress for those already managing heavy debt burdens, especially for households whose median incomes lag or decline. Recent research underscores that the intersections of race, income, and debt amplify the real-life impact of policy decisions made in Washington.
Last month, we explored how student debt impacts women differently. This month, we look back at how income disparities create space for debt inequality. SHED data show that student-debt burdens are heaviest at low incomes, especially for Indigenous women, and that Black and Hispanic women account for the largest counts behind on payments, underscoring the need for targeted fixes. Median income for U.S. households between 2023 and 2024 shows that income growth does not affect every racial group equally. Hispanic households saw the largest significant increase in median income, 5.5%. Asian households followed with a growth of 5.1%. Black households experienced the largest significant decrease at 3.3%, while respondents with bachelor’s degrees saw a considerable income increase of 2%. These income shifts highlight that families face unequal capacities to manage loans and debt.
SHED Some Light on Income Disparities
Debt-to-income burden is heaviest at low incomes; among borrowers under $25k, Indigenous women average $22,212 (90% of the bracket maximum). Table 1 shows the average student debt by income category, race/ethnicity, and sex. The complete income spectrum reveals how debt burdens shift dramatically across earning levels and between genders. Among borrowers earning under $25,000 annually, the average student debt load is $18,392, equivalent to more than 70% of the maximum income in this category. Average student debt rises sharply with income: $20,643 for those earning $25k-$50k, $27,843 for those earning $50k-$100k, and $37,098 for those earning $100,000 or more. The debt burden is heaviest at low incomes and isn’t evenly distributed across groups.
Table 1. Average Student Debt by Income, Race/Ethnicity, and Sex
At the lowest income level, debt-to-income ratios leave little capacity to repay on schedule for several groups. When we focus on women, Indigenous women carry the highest average debt at $22,212 (≈89% of bracket max), followed by Hispanic women at $20,192 (≈81%) and Black women at $18,857 (≈75%). Multiracial men earning under $25,000 face debt loads of $25,450, exceeding 102% of their maximum earning capacity. When these groups are analyzed in the aggregate, we miss the nuance of which groups face higher burdens.
Extreme burdens persist at higher income levels as well. Estimates of Asian men earning $25k-$50k are suppressed due to the small sample size; other middle-income groups show sizable ratios. For example, Multiracial women in this bracket carry debt ≈68% of the bracket maximum. The data reveals three patterns: extreme debt concentrations among low-income borrowers, persistent gender gaps that reverse direction across income levels, and outlier situations where debt exceeds earning capacity entirely.
Student Debt: Disparities by Race, Gender, and Income
Over a borrower’s lifetime, holding student debt could mean postponing wealth-building milestones like homeownership or retirement savings. Some groups’ burdens become overbearing when we layer student loans onto these income realities. Gaps in income growth can reflect different capacities to handle debt. These income disparities set the stage for unequal debt burdens. About 1.47M Hispanic women and 1.18M Black women are behind on student-loan payments; among Indigenous women who are behind, 77% earn under $25k. If burdens are tremendous at low incomes, we should see more borrowers behind on payments there. Table 2 shows that pattern.
Table 2 shows the distribution of people behind on student loan payments by race/ethnicity and sex. This analysis leverages the most current data available, disaggregated by race, gender, and income, providing a detailed portrait of student loan repayment difficulties among U.S. women. Disaggregation of repayment hardship by intersectional identities reveals that 77% of Indigenous women behind on payments earn $25,000 or less (See Table 2). Similarly, payment difficulty appears even at higher incomes for multiracial women. White and Hispanic women’s payment difficulty across incomes is more evenly distributed, with higher levels of representation in the middle-income categories. Disaggregating the data here allows us to see the scale of financial distress across different demographic groups. Is short-term financing the answer?
Buy Now, Pay Later: New Debt for Old Problems
Recent trends suggest companies aggressively market short-term finance products like BNPL to female consumers. Still, empirical evidence shows these products do not alleviate financial stress and may intensify debt traps for vulnerable groups. The latest data reveal a surprising trend: most BNPL users report middle or high incomes, contradicting assumptions that these products primarily serve lower-income households. Low-income users aren’t the majority of BNPL users. In fact, the distribution is skewed toward middle and higher-income categories, with the highest number of BNPL users (30%) reporting income in the $100k+ category. However, there’s another story behind BNPL, beginning with missing a payment.
Table 3 reports three metrics: (1) share of late BNPL payments, (2) late-payment rates by group, and (3) fee penalties among those who are late. As a share of late BNPL payments, Black women represent 19.7% of all late fees, Hispanic women account for 18.6%, and White women 16.5%. They experience late-payment rates at around 20% for Black women, 19% for Hispanic women, and 17% for White women (See Table 3.). Lower-income borrowers are overrepresented: those earning $25,000 or less make up 34.5% of late payments despite comprising a smaller share of BNPL users overall. Table 3. BNPL Penalty Patterns by Race/ Ethnicity and Sex
