House Refinance Center
More Foreclosures Lead To Fewer Minorities In College
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Housing Crisis Means Fewer Minorities Will
Attend College






As house values increased from 1997 to 2007, many homeowners used the equity in their homes to
send their children to college. The housing boom was especially helpful for African-Americans,
Hispanics and American Indians.

In the decade, 1997 to 2007, enrollment by white students in higher institutions rose by 12 percent. For
the same period enrollment by African American students was up 49 percent, and for Hispanics it was
67 percent.

One of the American dreams is for one generation to do better than the previous. This is true in
employment, wealth building and education. If the current trend is not reversed the present generation
will be taking several steps backwards, and it could take another ten years or more to pull even again.

An optimist would argue that the next generation would have no trouble outperforming our current
generation. The reason is that everything is going terribly wrong for our group. We are losing money in
the stock market. We are losing about 32% equity in our houses. We are finding it more difficult to get
credit, and unemployment is stuck at 9.1%.

With house prices continuing to fall and millions of houses underwater, parents are finding it difficult to
pull equity out of their houses. Price have fallen about 32 percent since the peak of the housing boom in
2007. One option left is for students who would like to pursue a higher education, is to take out a
student loan. The timing couldn't be worse as college tuition is rising. Since 1982 tuition has been rising
at twice the rate of inflation.

Many states are making drastic cuts in order to deliver a balanced budget to their constituents. These
cuts generally involve reducing the amounts of money earmarked for higher education. Private
endowments have also been affected by the recession. The end result is that universities are not able to
give grants and scholarships to many minority students.  

Hispanic households lost about two-thirds of their wealth between 2005 and 2009. African Americans
lost about 50% of their wealth. It should be noted that the fall in home equity among Blacks and
Hispanics was due in part to predatory lending. Blacks and Hispanics were sold sub-primes loans even
when they had a good credit score.

Community college is an alternative for minorities while the housing market continues to slump. With
their families facing foreclosure many students of minorities have decided to work and help their
parents cover expenses and pay the mortgage. Their hope is to continue with their higher education
when the housing market recovers or when their parents regain their financial strength.

There is no stigma in attending a community college. It is a lot cheaper than university and many of the
credits a student earns can be transferred to a 4 year college or university. This is a much better option
than taking out student loans and graduating with over $50,000 in debt.