Predatory Inclusion and Education Debt: Rethinking the Racial Wealth Gap

Abstract

Analyses of the recent surge in racial wealth inequality have tended to focus on changes in asset holdings. Debt patterns, by contrast, have remained relatively unexplored. Using 2001-2013 data from the Survey of Consumer Finances (SCF), we show that after peaking in 2007, debt levels for most debt types had returned to pre-financial crisis levels for blacks and whites by 2013. The primary exception to this is education debt, on which this paper focuses. We show that educational debt has increased substantially for blacks relative to whites in the past decade. We also show that this increase in debt is not attributable to differences in educational attainment across racial groups. These trends, we argue, reflect a process of predatory inclusion, where lenders and financial actors offer needed services to black households, but on exploitative terms that limit or eliminate their long-term benefits. Predatory inclusion, we propose, is one of the mechanisms behind the persistence of racial inequality in contemporary markets.

Where Platform Capitalism and Racial Capitalism Meet: The Sociology of Race and Racism in the Digital Society

“…One of the clearest articulations of predatory inclusion comes from work on education, where educational access and its attendant social rewards are extended to excluded groups on extractive terms (Dwyer 2018; Eaton et al 2016; Seamster and Charron-Chénier 2017). With higher education, predatory inclusion looks like expanding “access” to higher education (and its relation to labor market and status returns) by offering online college degrees that both for-profit and not-for-profit organizations market to African American women (Cottom 2017).…”

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“…The mechanics of the auto title loan industry lay bare the both the intentions and the design of a profit model that is directly contingent upon turning single‐payment loans into longer‐sequence loans that extract billions of dollars out of our most financially vulnerable communities. Such processes resemble what Seamster and Charron‐Chenier () refer to as predatory inclusion, which specifies the ways in which marginalized communities have been grafted into specific loan markets under exploitive terms. As we enter a new phase of financial deregulation, researchers and policy advocates must continue to focus on the processes through which these instruments are employed.…”

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“…The higher education system is plagued by predatory behavior and poor outcomes, particularly for the same student populations that have been historically excluded from postsecondary opportunities and disproportionately constitute the carceral state—students in low‐income situations and students of color (Seamster & Charron‐Chénier, 2017; Smeeding et al, 2011). For instance, among students in the bottom socioeconomic quartile, only 15% had earned a bachelor's degree within 8 years of their expected high school graduation, compared with 60% in the top quartile.…”