This study examines the association between educational loans and college graduation rates, with a focus on differences by race and ethnicity. Data come from the 1997 National Longitudinal Survey of Youth. Results from the event history analyses indicate that educational loans are positively related to college graduation rates, but only up to a point (about US$19,753). Although this nonlinear relationship holds true among White, Black, and Hispanic students, there are differences in the level of loans where its effect turns negative on graduate rates. There is little evidence overall that educational loans reduce racial and ethnic disparities in college graduation.