Racial Disparities in Student Debt and the Reproduction of the Fragile Black Middle Class

Abstract

A nascent literature recognizes that student loan debt is racialized and disproportionately affects youth of color, especially black youth. In this study, the authors expand on this research and ask whether black-white disparities in student debt persist, decline, or increase across the early adult life course, examine possible mechanisms for changes in racial disparities in student debt across early adulthood, and ask whether racial disparities in student debt contribute to black-white wealth inequality among a recent cohort of college-going young adults. The authors address these questions using nationally representative data from the National Longitudinal Study of Youth 1997, multilevel growth curve models, and linear decomposition methods. There are three findings. First, black-white disparities in debt increase across the early adult life course, and previous research underestimated racial disparities in debt. Second, growth in this racial disparity is partially explained by differences in the social background, postsecondary experiences, and disparities in attained social and economic status of black and white young adults. As a result, the authors find that, compositionally, racial inequalities in student debt account for a substantial minority of the black-white wealth gap in early adulthood and that this contribution increases across the early adult life course. The authors conclude that debt trajectories are more informative than point-in-time estimates and that student debt may be a new mechanism of wealth inequality that creates fragility in the next generation of the black middle class.

Inequality and Opportunity in a Perfect Storm of Graduate Student Debt

“…It is not access to credit that thwarts the mobility of African American graduate and professional degree-earners; it is the degree of debt they must assume to earn their degrees. The historically high levels of debt incurred by African Americans who earn graduate degrees may inhibit their ability to support their children’s educational expectations, contributing to the well-documented fragility of the black middle class (Houle and Addo 2018; Landry and Marsh 2011).…”

“…At least part of this disparity is attributable to many African American bachelor’s degree-holders’ borrowing for graduate school (Baum and Steele 2018). Black-white disparities in student debt tend to increase through early adulthood and are partially explained by differences in socioeconomic background and current adult socioeconomic status (Houle and Addo 2018).…”

Does Student Loan Debt Hinder Community Well-Being?

“…Based on the descriptive analysis of the Institute of Educational Sciences ( 2018 ) it is clear that not all students who have student loan debt obtained the same level of educational outcomes and those differences make drawing broad generalizations about labor market outcomes difficult. Houle and Addo ( 2019 ) detail the heterogeneity in student borrowers, particularly in minority populations and first-generation students.…”

The U.S. Student Loan Debt Crisis: State Crime or State-Produced Harm?

“…Finally, the harm caused by student loan debt weighs more heavily on African American students and their families, especially those from lower socioeconomic backgrounds (Houle & Addo, 2018; Jackson & Reynolds, 2013; Miller, 2017). Analyzing national longitudinal data for beginning postsecondary students in the 2003–2004 academic year followed up 12 years later, Miller (2017) found that African American/Black students were more likely to borrow than their White or Hispanic/Latino counterparts overall (78% vs. 57% and 58%, respectively), in 4-year public universities (87% vs. 60% and 65%), and private, for-profit institutions (95% vs. 90% and 84%).…”