There are 104,180 student loan borrowers with a collective balance of $220 million and a median balance of $20,197 in San Francisco. That’s about 14 percent of the adult population. (Mike Koozmin/2012 S.F. Examiner)

Report: help ‘urgently’ needed to address growing student loan debt

Growing crisis hits SF’s poorest neighborhoods the hardest

Student loan debt is increasing throughout the Bay Area along with the inability to make payments, a trend that is hitting low-income neighborhoods and communities of color the hardest.

A new report from Treasurer José Cisneros’ Office of Financial Empowerment released Tuesday in partnership with the Federal Reserve Bank of San Francisco provides a detailed look at the burden of student loans in the Bay Area and warns of the impacts.

“In a region where many households struggle to achieve or maintain financial stability, the increasing student loan debt burden and distress in the Bay Area must urgently be addressed,” said the report titled “At What Cost? Student Loan Debt in the Bay Area.”

Officials will discuss the report’s findings during a live stream at 9 am.

Between 2003 and 2018, student loan debt increased by 243 percent. About 735,000 Bay Area student loan borrowers, 12.2 percent of the population, owe a combined $26.6 billion in student debt, with an average balance of $36,243, the report found. School tuition and fees have more than doubled in the past three decades.

During the past 15 years, “borrower delinquency rate increased by 60 percent, from 7.4 percent to 11.8 percent, and the default rate increased by 135 percent, from 3.8 percent to 9.1 percent.”

Delinquency is defined as a borrower who is 90 days or more past due on payments and default as someone at least 270 days past due on payments.

Those living in low-income neighborhoods had higher rates of delinquency and default on their loans. “Twenty percent of borrowers in the lowest income neighborhoods are 90 days or more delinquent on their loans, with three quarters of these borrowers in default,” the report said.

The report found higher rates of delinquency and default in neighborhoods with high percentages of Black and Hispanic residents.

“Student loan debt is accelerating the racial wealth gap in San Francisco, across the Bay Area and nationally. These findings are stark, upsetting, and impossible to ignore,” Cisneros said in a statement. “We must work collectively to provide relief for struggling student loan borrowers and strive for a future where higher education is affordable for all.”

In San Francisco alone, there are 104,180 student loan borrowers with a collective balance of $220 million and a median balance of $20,197. That’s about 14 percent of the adult population.

The delinquency rate across The City is 10 percent.

But the delinquency rates are much higher in some of San Francisco’s poorest neighborhoods.

In the Bayview-Hunter’s Point neighborhood the rate is 24.6 percent. The delinquency rate on Treasure Island is 23.1 percent, 17 percent in Hayes Valley, Tenderloin and Mid-Market areas and 16.1 percent in South of Market.

“In many zip codes at least one in ten borrowers is three or more months behind on their loan payments, an indicator of broader financial distress for residents in a high cost of living area,” the report said of student loan borrowers in San Francisco.

There were also high default rates found in San Francisco zip codes with a high percentage of black residents.

Making payments is one thing, but making payments that actually draws down the debt is another. Throughout the Bay Area many in low-income neighborhoods are only making the minimum payments.

“In the lowest income neighborhoods, only 37.1 percent of borrowers are successfully making payments that reduce their student loan balances, compared to 53.8 percent of borrowers in the highest income neighborhoods,” the report said.

Student debt has become a concern across the nation. On Monday, Democratic presidential hopeful Senator Elizabeth Warren of Massachusetts announced a plan to eliminate most people’s school debt using revenue from her proposed “Ultra-Millionaire Tax.”

In the Bay Area, the burden of school debt is exacerbated by lack of wage growth and the rise in the overall cost of living.

“Student debt burden is especially concerning in the Bay Area, where incomes have not kept pace with the skyrocketing cost of living, and income inequality has increased significantly over the past several decades,” the report said.

There are a host of associated impacts from being saddled with student loans, the report said. There are lower rates of homeownership, income inequality is perpetuated, less small businesses are opened and even people’s physical and mental health decline.

The report provides some recommendations.

That includes having educational leaders better counsel prospective borrowers counseling for prospective borrowers and efforts to draw down costs of college, including financial aid. The report also suggests increased regulation of lending practices.

The Office of Financial Empowerment is expected to continue its work around student debt, including offering services recommended in the report.


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