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The Income and Wealth Effects of Student Loan Debt

In: Bait and Switch

Author

Listed:
  • Robert H. Scott, III

    (Monmouth University)

  • Joseph N. Patten

    (Monmouth University)

  • Kenneth Mitchell

    (Monmouth University)

Abstract

Today, approximately 44 million Americans hold around $1.7 trillion in student loan debt, with over 20% of borrowers in default. Over one million borrowers fall into default annually. In this chapter, we study the income and wealth effects from going to college stratified by race, first-generation status, and gender. Our findings show that Black and first-generation students have lower college completion rates, default more often on student loan debts, and gain much 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, which is largely explained by many students lacking intergenerational wealth. 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, gender, and class.

Suggested Citation

  • Robert H. Scott, III & Joseph N. Patten & Kenneth Mitchell, 2023. "The Income and Wealth Effects of Student Loan Debt," Springer Books, in: Bait and Switch, chapter 0, pages 69-98, Springer.
    • Handle: RePEc:spr:sprchp:978-3-031-46375-4_3
    DOI: 10.1007/978-3-031-46375-4_3
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