Student loan default rates are significantly higher for Black borrowers than for White borrowers

and this gap persists when controlling for education attainment. Black college graduates are four times

more likely than White graduates to default on student loans while non-graduates are only about twice

as likely to default. This is despite the fact that the distribution of loan amounts is similar across Black

and White borrowers and that monthly student loan payments are often smaller for Black individuals

since they are more likely to enroll in income driven repayment plans. To what extent can observable

differences in financial circumstances account for the racial gap in student loan default rates? Are the

factors driving the gap similar for college graduates and non-graduates? Does the financial burden

associated with student debt affect choices later in life in the same way across the two groups? To

address these questions, we construct a life cycle consumption-savings model that captures observed

heterogeneity in initial wealth, human capital risk, student loan debt and repayment choices, earnings

processes, including racial wage discrimination, and unobserved heterogeneity at the time of labor

market entry. We use our model to quantify the degree to which each of these channels contributes

to the observed gap in Black-White student loan default rates over the life cycle.