Jason N. Houle, Fenaba R. Addo:

A nascent literature recognizes that student loan debt is racialized and disproportionately affects youth of color, especially black youth. In this study, the authors expand on this research and ask whether black-white disparities in student debt persist, decline, or increase across the early adult life course, examine possible mechanisms for changes in racial disparities in student debt across early adulthood, and ask whether racial disparities in student debt contribute to black-white wealth inequality among a recent cohort of college-going young adults. The authors address these questions using nationally representative data from the National Longitudinal Study of Youth 1997, multilevel growth curve models, and linear decomposition methods. There are three findings. First, black-white disparities in debt increase across the early adult life course, and previous research underestimated racial disparities in debt. Second, growth in this racial disparity is partially explained by differences in the social background, postsecondary experiences, and disparities in attained social and economic status of black and white young adults. As a result, the authors find that, compositionally, racial inequalities in student debt account for a substantial minority of the black-white wealth gap in early adulthood and that this contribution increases across the early adult life course. The authors conclude that debt trajectories are more informative than point-in-time estimates and that student debt may be a new mechanism of wealth inequality that creates fragility in the next generation of the black middle class.