Financial stress, race, and student debt during the Great Recession.

Martin EC, Dwyer RE. Financial Stress, Race, and Student Debt During the Great Recession. Social Currents. 2021;8(5):424-445. doi:10.1177/ 23294965211026692

Explanation

This study will investigate how students respond to the debt they have, their families, and their race.

As the responsibility for paying for higher education has shifted from states to students and their families, student debt has expanded in the 2000s to a wide range of U.S. households, particularly black and Hispanic households.

Having student debt is an economic risk that may leave households more vulnerable to economic shocks.

We used our own panel of consumer credit surveys from 2007 to 2009 to study the relationship between household student loan burden and the likelihood of financial stress during the Great Recession.

Across the four dimensions of student loan burden, we find a robust positive relationship with holding certain household characteristics and previous financial stress, but this association is shown to have a higher odds ratio for blacks and Hispanics compared to white households.

These results serve to illustrate the importance of considering the household risks that arise in the U.S. financing system, especially during the inevitable recession of a capitalist economy.