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Intergroup disparity among student loan borrowers

Author

Listed:
  • Robert H. Scott

    (Monmouth University)

  • Kenneth Mitchell

    (Monmouth University)

  • Joseph Patten

    (Monmouth University)

Abstract

This paper uses stratification economics to study intergroup disparities among student loan borrowers. Today, approximately 44 million Americans hold around US $1.7 trillion in student loan debt, with over 20% of borrowers in default. Over one million borrowers fall into default annually. We find that Black and first-generation students have lower college completion rates, default more often on student loan debts, and gain less of a wage premium from their college degrees and graduate degrees compared to white graduates. We also find significant racial and class differences in household wealth generation among college graduates. We use the most recent data from the Federal Reserve Bank of New York’s Consumer Credit Panel and the Survey of Consumer Finances to study the changing size and distribution of student loan debt and default rates based on race and class. What we find is that the student loan debt system creates significant debt traps for many Black and first-generation students.

Suggested Citation

  • Robert H. Scott & Kenneth Mitchell & Joseph Patten, 2022. "Intergroup disparity among student loan borrowers," Review of Evolutionary Political Economy, Springer, vol. 3(3), pages 515-538, October.
    • Handle: RePEc:spr:revepe:v:3:y:2022:i:3:d:10.1007_s43253-022-00077-4
    DOI: 10.1007/s43253-022-00077-4
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    References listed on IDEAS

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    1. William Darity, 2005. "Stratification economics: The role of intergroup inequality," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 29(2), pages 144-153, June.
    2. Sheila Ards & Inhyuck Ha & Jose-Luis Mazas & Samuel Myers, 2015. "Bad Credit and Intergroup Differences in Loan Denial Rates," The Review of Black Political Economy, Springer;National Economic Association, vol. 42(1), pages 19-34, June.
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    6. Adam Looney & Constantine Yannelis, 2015. "A Crisis in Student Loans? How Changes in the Characteristics of Borrowers and in the Institutions They Attended Contributed to Rising Loan Defaults," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 46(2 (Fall)), pages 1-89.
    7. Robert B. Williams, 2017. "Wealth Privilege and the Racial Wealth Gap: A Case Study in Economic Stratification," The Review of Black Political Economy, Springer;National Economic Association, vol. 44(3), pages 303-325, December.
    8. William Darity & Jason Dietrich & David K. Guilkey, 2001. "Persistent Advantage or Disadvantage?: Evidence in Support of the Intergenerational Drag Hypothesis," American Journal of Economics and Sociology, Wiley Blackwell, vol. 60(2), pages 435-470, April.
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    10. William Darity & Darrick Hamilton, 2012. "Bold Policies for Economic Justice," The Review of Black Political Economy, Springer;National Economic Association, vol. 39(1), pages 79-85, March.
    11. William Darity & Darrick Hamilton & James Stewart, 2015. "A Tour de Force in Understanding Intergroup Inequality: An Introduction to Stratification Economics," The Review of Black Political Economy, Springer;National Economic Association, vol. 42(1), pages 1-6, June.
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    Cited by:

    1. Merve Burnazoglu & Stefan Kesting & Franklin Obeng-Odoom & Alyssa Schneebaum, 2022. "Introduction: Advancing Stratification Economics — methodological perspectives and policy applications," Review of Evolutionary Political Economy, Springer, vol. 3(3), pages 457-461, October.

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    More about this item

    Keywords

    Class disparity; First-generation; For-profit colleges; Higher Education Act; Income disparity; Intergenerational wealth; Racial disparity; Stratification economics; Student loan debt;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • G51 - Financial Economics - - Household Finance - - - Household Savings, Borrowing, Debt, and Wealth
    • I22 - Health, Education, and Welfare - - Education - - - Educational Finance; Financial Aid
    • I24 - Health, Education, and Welfare - - Education - - - Education and Inequality
    • I26 - Health, Education, and Welfare - - Education - - - Returns to Education
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification

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