Student Debt: A New Mechanism for Racial Social and Economic Inequality

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Reviewed by Didier Dumerjean


In the US, a college degree is a prerequisite for access to many middle-class and high-paying jobs. Yet, the social and economic payoff of a college degree is racialized, as evidenced by the highest economic disparities across races existing within the college-educated middle class. Relatedly, a growing body of research recognizes that the burdens of rising college costs, decreasing financial aid packages, and increasing student loan debt to bridge the gap are disproportionately shouldered by students of color, particularly Black youth. Race scholars argue that these disparities in costs and benefits of a college education have helped create a “fragile Black [college-educated] middle class” at increased risk for downward mobility.

Previous studies have found that parents’ social and economic resources are key determinants of their adult children’s college success. White families are more able to draw from their wealth to pay for college than Black families. As a result, Black students are more vulnerable to being steered toward predatory, high-interest loans at institutions that offer fewer labor market benefits and have high drop-out rates, making the debt that much more difficult to repay. Beyond college, labor market discrimination contributes to growing disparities in student debt over the course of a career. Scholars have hypothesized that these disparities in college funding sources and career trajectory contribute to long-standing racial inequalities in wealth. In this study, the authors build on this literature by:

  • Theorizing that racial disparities in student loan debt accumulation and repayment result from generational racial economic inequality and discrimination
  • Exploring factors that contribute to differences in Black-white debt trajectories over time
  • Analyzing whether racial disparities in student loan debt are linked with racial disparities in wealth during early adulthood

Dr. Jason N. Houle is an Associate Professor of Sociology at Dartmouth College specializing in social disparities in mental health and well-being, processes of social stratification and mobility, and life course sociology. Dr. Fenaba R. Addo is an Associate Professor of Public Policy at The University of North Carolina at Chapel Hill studying debt and wealth inequality, union formation, and economic strain as a social determinant of health and well-being.

Methods and Findings

Drawing data from the National Longitudinal Study of Youth’s 1997 Cohort, the authors analyzed the student debt and net wealth of 3,516 respondents at ages 20, 25, and 30. They included variables that are constant, including race, parents’ highest education, parental wealth, number of siblings, family structure, sex, and region of residence; and those that change over time, including highest degree pursued and attained, total aid-to-cost ratio years enrolled in a private institution, and other measures of socioeconomic status (i.e. marital status, parental status, full-time employment, wages, home ownership). The authors use two types of statistical analyses, hierarchical linear growth curve models, and regression decomposition, to conduct their analysis.

  1. Race is significantly associated with debt levels. Black youth report 86% more debt than their white counterparts.
  2. These racial differences in debt grow over time by about 7% annually. Black youth starting at 86% more debt than their white counterparts faced would lead to an approximately 186% disparity 15 years later.
  3. Fifty-one percent of the racial disparity in debt across early adulthood is explained by racial differences in family background, postsecondary experiences, and young adult social and economic factors. Controlling for these factors, the racial debt gap only increased by approximately 48% over the 15 years observed.

To better understand the relationship between student debt and the racial wealth gap, they further analyzed the data at ages 25 and 30. They find that the average racial wealth gap is $46,849, and that Black young adults held 10% less wealth than their white counterparts, attributable to the higher student debt burden. Educational experiences accounted for 14% of the wealth differential, while racial disparities in social status accounted for 36% of the wealth gap. They also found that the racial wealth gap nearly triples between ages 25 and 30, and that the contribution of student debt to the racial wealth gap also increases over time from 13% at age 25 to 23% at age 30.


The authors conclude that the exaggerated impact of the student debt on Black youth will have consequences for the next generation of the Black middle class. Their work builds on the existing body of research by assessing changes in these factors over time. The findings substantiate their claim that the student debt crisis is contributing to increasing racial disparities in wealth, and that the debt gap grows exponentially into early adulthood.

Race scholars have long argued that the Black middle class is uniquely fragile. Black people are not only less likely to reach the middle class than their white counterparts, but also in a more precarious position once they achieve that status. While the study provides new information linking inequality and processes of debt accumulation and repayment, the research is limited by an inability to follow these young adults as they age further, an inability to speak to causal processes and an inability to examine beyond the Black-white binary with the available data. The authors suggest that future research could further examine how debt trajectories are linked to social and economic outcomes to better understand the consequences of student debt.


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