Fidelity Investments will commit $250 million to a new education initiative to support up to 50,000 underserved minority students with scholarships and mentorship programs in the next five years.
The Invest in My Education program, announced Tuesday, plans to increase graduation rates and students’ ability to complete their education debt free.
Pamela Everhart is Fidelity Investments’ head of Regional Public Affairs and Community Relations.
Pamela Everhart, Fidelity’s head of Regional Public Affairs and Community Relations, said the program is part of the firm’s plans to direct more resources to some minority communities.
“It’s a strategic focus to mitigate some of the systemic and complex barriers that historically underserved students face,” Everhart said. “We believe that all students, regardless of their backgrounds, should have an opportunity to access higher education and economic mobility and then begin to build a path to generational wealth.”
Fidelity research found that 21% of Black students and 32% of Latinx students graduate from college in four years, compared to 45% of white students. The company also found that, on average, Black and Latinx students accrue $25,000 more in student debt than their white peers. To address those inequalities, Fidelity is partnering with UNCF, the nation’s largest private provider of scholarships and other educational support to Black students, and other nonprofits.
Michael Lomax, UNCF’s president and CEO, said the comprehensiveness of the support in Fidelity’s Invest in My Education program will help students succeed. However, he said the most exciting part of the program is that it targets students who are not necessarily getting top grades at elite schools because they have to balance their studies with working jobs to pay for them – what he calls “The Mighty Middle.”
“I’m glad to see they’re getting a little respect — they’re the Rodney Dangerfield of students,” Lomax said. “They’re not always achieving the highest academic results. But they’re staying in the fight. They’re doing the work. And they’re getting the degree. And they have to work doubly hard because people don’t always focus on them and give them the support.”
He said these students, attending “the workhorse institutions of American higher education — community colleges, historically Black colleges and universities, state universities,” also work hard and can make a major impact on their communities once they graduate.
This Jan. 2023 photo shows Drew Ve’e at the University of Utah. He is a junior studying finance at the university and part of Fidelity Investments’ Opportunity Scholars program.Â
“Helping them on that journey is super important,” said Lomax, adding that the mentorship component of the program, which will include Fidelity employees as well as other volunteers, is just as important as the financial scholarships.
Drew Ve’e, a junior at the University of Utah, said the mentorship he has received from the Fidelity-sponsored Opportunity Scholars program in in just the past four months has been incredibly helpful to his studies as a finance major and as a student in general.
Ve’e, 29, said he moved to the University of Utah to focus fully on his studies, after leaving Southwestern Oklahoma State University, where he was a quarterback on the football team. His mentor has made the transition easier and made him feel better about his decision, as well as offering tips on his resume and finding scholarships.
“It’s really helped me to gain a lot more confidence,” Ve’e said. “And we have similar backgrounds in sports and college, so it was really easy to connect with him and made me feel a lot more comfortable.”
Ve’e said that between scholarships and campus jobs, he should be able to graduate debt-free, an accomplishment that Fidelity is prioritizing because college debt has become not just a financial problem, but an emotional one as well because of all the worry associated with it.
Fidelity’s Invest in My Education program is structured to address as many barriers to debt-free graduation as it can, Everhart said, including systemic donations to better prepare high school students for further education. But for her, the emphasis on mentorship is personal.
“I’m looking forward to sharing my background as a young Black girl growing up in a small town where people invested in me and saw something in me to incentivize to continue,” she said. “I want to make sure that these students hear from people who will believe in them and will take time to listen to them, listen to their backgrounds.”
How student loan forgiveness could boost Black homeownership rates
How student loan forgiveness could boost Black homeownership rates
Updated
Six in 10 millennials who don’t own a home say it’s because of student loan debt, according to a 2021 survey from the National Association of Realtors.
College costs skyrocketed in the last two decades. Average tuition between 2010-11 and 2020-21 school years rose nearly 31% at public universities and more than 41% at private universities, according to the Education Data Initiative. Students now pay an average of $35,551 a year.
This debt has worsened the racial homeownership gap, which has widened over decades of discriminatory lending practices, racist housing policies, and barriers to wealth for Black Americans and other people of color. These trends led higher numbers of students from marginalized communities to assume additional financial risk for a college degree.
For many, loans make college possible. More than 45 million people in 2020 had student loan debt, averaging $37,693 per person, per Education Data Initiative. These costs have made it difficult for many to afford a down payment on a home. The homeownership rate falls by nearly 2 percentage points for every additional $1,000 in student loan debt a borrower holds, according to the Federal Reserve.
Stacker examined data from the Federal Reserve and the Department of Education to see how federal student loan forgiveness could boost U.S. homeownership rates, particularly among Black Americans.
Because Black Americans have historically been unable to build wealth as easily as their non-Black counterparts, they’re relying more on loans to obtain big-ticket items like higher education and homeownership. Higher student loan payments and interest rates hinder their ability to buy a home and can trap them in a cycle of inequality. In August 2022, the Biden administration announced it would forgive $10,000 in student loan debt, affecting about 43 million borrowers.
Keep reading to see the effect of student loan forgiveness on Black homeownership rates in the U.S.
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Americans hold more than $1.7 trillion in student loan debt
Updated
Student loan debt has nearly tripled since 2006.
Although total debt continues to increase, the growth rate decelerated considerably. In 2013, the year-over-year change was 12.1%; last year, it was 0.31%.
The federal government paused federal student loan payments during the pandemic, which set interest rates at 0% and allowed borrowers to skip loan payments without the risk of late fees or default. This policy helped 4.7 million people lower their balances, but it’s due to expire at the end of 2022.
Black and Hispanic students are more likely to have student loan debt
Updated
A Brookings Institute analysis found that Black Americans face a cycle of inequality when paying for higher education. The report found that Black American households cannot build wealth at the same rate as non-Black households. This finding also means Black students borrow more money for college and have higher loan payments upon graduation, which reduces their opportunities to build wealth during their prime earning years.
Hispanic Americans also experience a wealth gap, which fuels the need to take out more in student loans, according to UnidosUS. Many Hispanic Americans are also first-generation college students, which can make it difficult for them to navigate the financial aid system.
Black Americans have lower homeownership rates
Updated
The Black homeownership rate (43.4%) lags considerably behind white Americans (72.1%) and has declined by nearly 1 percentage point since 2010, according to the National Association of Realtors. In fact, that gap is wider today than when the Fair Housing Act was passed in 1968.
Black households also lag in earnings, making only 61 cents for every dollar that comparable white households earn, according to an analysis by the Economic Policy Institute of the latest Census Bureau data. With lower earnings on average, Black Americans are denied mortgages at double the national average, according to a 2022 LendingTree study.
Black Americans will often seek higher education to help increase their earning potential. Still, it’s hard to take on more debt when student loan debt payments make up a significant portion of a monthly budget. Due to student loan debt, nearly half of Black Americans said they would likely delay homeownership.
What student loan forgiveness could mean for Black Americans
Updated
Black Americans face disparities in wealth building, and student loans have exacerbated that issue. More than half of Black American households with student loan debt have no or negative net worth, about twice as much as those with no student debt, according to a Brookings Institute analysis.
Student loan forgiveness would not eliminate the racial wealth gap but could significantly reduce it. Loan forgiveness may also present more opportunities for Black Americans to afford homes and build intergenerational wealth consistent with the American Dream.
