THE TRILLION DOLLAR STUDENT LOAN CRISIS: ADDRESSING THE RACIAL WEALTH DIVIDE WITH AFRICAN AMERICAN BORROWERS AT DELAWARE STATE UNIVERSITY, an ACTION RESEARCH STUDY

Abstract

The trillion-dollar student loan crisis has intensified financial instability for students across the United States, with African American borrowers facing disproportionate burdens due to systemic racial wealth inequalities. This qualitative action research study explored the intersection of student loan indebtedness and the racial wealth divide among African American students at Delaware State University (DSU). In collaboration with the DSU Office of Student Success, Sallie Mae, the DSU Writing Lab, the U.S. Department of Education, and various university departments, this study aimed to implement and assess an intervention designed to increase scholarship awareness and reduce reliance on loans among DSU’s African American students.

The intervention involved the creation of a targeted scholarship writing lab that provided tailored guidance in scholarship application processes, financial literacy, and loan management. Data collection included pre- and post-intervention scholarship application rates, the number of scholarships awarded, and documented reductions in student borrowing. Initial findings revealed significant barriers in scholarship access and application completion due to limited financial literacy, lack of resources, and systemic inequities. The scholarship writing lab proved to be a promising model, increasing student engagement with scholarship opportunities, and reducing average loan amounts by promoting alternative funding sources.

This study highlighted the need for culturally responsive financial literacy programs and scholarship support mechanisms that specifically address the unique challenges African American students face in higher education. By examining these outcomes, this research contributed to the broader conversation on closing the racial wealth gap, offering evidence-based recommendations for institutional policy changes to mitigate the impact of loan indebtedness on African American students at DSU and other Historically Black Colleges and Universities (HBCUs). Findings from this study suggested that targeted interventions are vital to empowering students with the resources and knowledge needed to navigate higher education more equitably, enhancing their financial well-being post-graduation.