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Cited by 249Higher Education Research StudiesIntergenerational and Educational Inequality StudiesSchool Choice and Performance

Young, Black, and (Still) in the Red: Parental Wealth, Race, and Student Loan Debt

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Addo, Fenaba R., Houle, Jason N., Simon, Daniel·2016·Race and Social Problems
DOI 10.1007/s12552-016-9162-0PMC PMC6049093
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Abstract

Taking out student loans to assist with the costs of postsecondary schooling in the US has become the norm in recent decades. The debt burden young adults acquire during the higher education process, however, is increasingly stratified with black young adults holding greater debt burden than whites. Using data from the NLSY 1997 cohort, we examine racial differences in student loan debt acquisition and parental net wealth as a predictor contributing to this growing divide. We have four main results. First, confirming prior research, black young adults have substantially more debt than their white counterparts. Second, we find that this difference is partially explained by differences in wealth, family background, postsecondary educational differences, and family contributions to college. Third, young adults' net worth explain a portion of the black-white disparity in debt, suggesting that both differences in accumulation of debt and ability to repay debt in young adulthood explain racial disparities in debt. Fourth, the black-white disparity in debt is greatest at the highest levels of parents' net worth. Our findings show that while social and economic experiences can help explain racial disparities in debt, the situation is more precarious for black youth, who are not protected by their parents' wealth. This suggests that the increasing costs of higher education and corresponding rise in student loan debt are creating a new form of stratification for recent cohorts of young adults, and that student loan debt may be a new mechanism by which racial economic disparities are inherited across generations.

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  • One result of unmet need for low-wealth students is student loan debt, which plays a role in producing short-term, long-term, and intergenerational financial insecurity, especially for Black families.

    “We show that one result of unmet need for low-wealth students is student loan debt, which plays a role in producing short-term, long-term, and intergenerational financial insecurity, especially for Black families (Addo etal., 2016; Addo and Houle 2016; Meschede etal., 2017).”

    From Wealth, Race, and Under-Addressed Financial Need in Federal Student Aid Policy (2025) · cites this paper as Addo and Houle 2016

    The Discussion (page not provided) says loans bridge the gap between limited parental resources and rising college costs, and describes financial risks for Black young adults. It also suggests that debt may reproduce racial economic inequality across generations. The claim presents these short-, long-, and intergenerational effects as established consequences, whereas the paper frames the longer-term and intergenerational effects as possibilities. (LLM, conf=0.83)

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  • Even when accounting for family income differences, individuals from low-wealth families have more student debt than their higher wealth peers.

    “Addo et al. (2016) show that, even when accounting for family income differences, individuals from low-wealth families have more student debt than their higher wealth peers.”

    From Wealth, Race, and Under-Addressed Financial Need in Federal Student Aid Policy (2025) · cites this paper as Addo et al., 2016

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Research works printed but not linked: 3

  1. Allison PD 2001 Missing data Thousand Oaks, CA Sage Publications
  2. Carneiro P Heckman JJ 2002 The evidence on credit constraints in postsecondary schooling The Economic Journal 112 702 734
  3. Stewart KJ Reed SB 1999 Consumer Price Index research series using current methods, 1978–98 Monthly Labor Review 122 6 29 38

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Authors
Addo, F. R., Houle, J. N., & Simon, D.
Affiliations
  • University of Wisconsin–Madison (US)
  • Dartmouth College (US)
  • University of Colorado Boulder (US)
Corresponding author
Addo, Fenaba R.
ORCID
Venue
Race and Social Problems
Publisher
Springer Science and Business Media LLC
Published
2016-02-08
Volume
8
Issue
1
Pages
64-76
ISSN
  • 1867-1748 (ISSN-L)
  • 1867-1756
DOI
10.1007/s12552-016-9162-0
PMC
PMC6049093
OpenAlex
W2252677566
Cited by
249
References
61
Citations by year
2026: 6 · 2025: 23 · 2024: 23 · 2023: 39 · 2022: 39 · 2021: 46 · 2020: 36 · 2019: 12 · 2018: 13 · 2017: 9 · 2016: 2
FWCI
53.26
Type
journal article
Language
en
Open access
Licence
www.springer.com/tdm (tdm)
Locations
  • Race and Social Problems (publishedVersion)
  • PubMed (publishedVersion)
  • Europe PMC (PubMed Central) (acceptedVersion)
  • PubMed Central (acceptedVersion)
Funders
Eunice Kennedy Shriver National Institute of Child Health and Human Development (P2CHD047873)
Topics
  • Social Sciences › Education › Higher Education Research Studies
  • Social Sciences › Sociology and Political Science › Intergenerational and Educational Inequality Studies
  • Social Sciences › Education › School Choice and Performance
Keywords
student debt, racial disparities, black-white gap, parental wealth, intergenerational transmission, young adults, higher education costs, debt repayment, educational stratification

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