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Why Student Loans Don’t Work for Native American Students

Few tribal colleges allow their attendees to take out federal student loans because of how hard they are for tribal students to repay.

By Francie Diep


(Photo: United Tribes Technical College/Facebook)

Just three out of the 32 colleges and universities in America that are run by Native tribes now allow their students to take out federal loans, BuzzFeed reports. The report came after BuzzFeed identified United Tribes Technical College in North Dakota as having the fourth-highest rate of student-loan defaults in the nation. It turned out that, by the time of BuzzFeed’s ranking, United Tribes has already joined many of its tribal peers in cutting off their attendees’ access to federal loans.

BuzzFeed’s story highlights how poorly the student-loan system serves America’s most vulnerable college students. Many tribal-college officials think federal loans don’t serve their unique population well. “Particularly when you look at the demographics of our students — students who have lived with generational poverty, unemployment, who have no experience with credit — that’s a recipe for disaster when it comes to loans,” Carrie Billy, president of the American Indian Higher Education Consortium, told BuzzFeed.

During the 2009–10 school year, the average annual income of students attending tribal college was less than $18,000, according to an American Indian Higher Education Consortium report. Once they graduate, tribal-college students may have a tough time finding a job with which they can repay their loans, especially if they want to work in the reservations where they may have grown up or gone to school.

During the 2009–10 school year, the average annual income of students attending tribal college was less than $18,000.

About half of people age 16 or older living in tribal lands don’t work, according to the Bureau of Indian Affairs. A series of focus groups commissioned by the New America Foundation last year found that students who struggle to repay their loans usually have low balances ($16,000, on average) and can have major financialmisconceptions that suggest they’re naïve borrowers—for example, some thought they didn’t have to repay their loans if they didn’t finish their degrees.

Tribal colleges have another incentive to block their students from taking out federal loans. If too many students in a school default, the government can pull funding from the school altogether. That would mean, among other things, no more Pell Grants for students. In the 2009–10 school year, more than three out of four tribal college-goers relied on Pell Grants.

To make up for the lack of loans, tribal colleges try to offer scholarships and tuition waivers aimed at allowing attendees to graduate debt-free, BuzzFeed reports. That means tribal colleges need to have money they can offer students, but they face inequities in funding, compared to other public schools, according to the American Council on Education, an advocacy group for executives from all kinds of colleges. States usually don’t fund tribal colleges, even though as many as 47 percent of their students may be non-tribal state residents, according to the American Council on Education.

The American Indian Higher Education Consortium advocates for the federal government to step up and pay as much as the Tribally Controlled Colleges and Universities Assistance Act allows — $8,000 per Native student. In 2016, tribal colleges received $6,355 per Native student.