ArticlePDF Available

Predatory Inclusion and Education Debt: Rethinking the Racial Wealth Gap

Abstract and Figures

Analyses of the recent surge in racial wealth inequality have tended to focus on changes in asset holdings. Debt patterns, by contrast, have remained relatively unexplored. Using 2001 to 2013 data from the Survey of Consumer Finances, we show that after peaking in 2007, racial inequalities for most debt types returned to prefinancial crisis levels. The exception has been educational debt—on which we focus in this article. Our analyses show that educational debt has increased substantially for blacks relative to whites in the past decade. Notably, this unequal growth is not attributable to differences in educational attainment across racial groups. Rather, and as we argue, this trend reflects a process of predatory inclusion—a process wherein lenders and financial actors offer needed services to black households but on exploitative terms that limit or eliminate their long-term benefits. Predatory inclusion, we propose, is one of the mechanisms behind the persistence of racial inequality in contemporary markets.
Content may be subject to copyright.
https://doi.org/10.1177/2329496516686620
Social Currents
2017, Vol. 4(3) 199 –207
© The Southern Sociological Society 2017
Reprints and permissions:
sagepub.com/journalsPermissions.nav
DOI: 10.1177/2329496516686620
journals.sagepub.com/home/scu
Empirical/Policy
Racial disparities in wealth have increased
sharply since the start of the Great Recession
(Pfeffer, Danziger, and Schoeni 2013).
Explanations for this increase have focused pri-
marily on blacks’ disproportionate housing
asset losses. Wealth levels are a function of
both household assets and household debt.
Racial disparities in debt burdens, however,
have received relatively less attention in the
sociological literature. In this article, we con-
tribute to the study of racial economic inequal-
ity by examining trends in household debt
accumulation since 2000. We focus specifically
on the recent emergence of a dramatic racial
disparity in one specific type of debt: education
debt. Educational debt accumulation, we argue,
is a racialized process. Historical and contem-
porary patterns of racial inequality in the United
States lead black households to accumulate
larger amounts of student debt relative to white
households, with little gains in terms of educa-
tional attainment for blacks. We propose the
concept of predatory inclusion as a framework
for understanding this disparity.
Predatory Inclusion: Race and
Debt in the United States
Predatory inclusion refers to a process whereby
members of a marginalized group are provided
with access to a good, service, or opportunity
from which they have historically been excluded
686620SCUXXX10.1177/2329496516686620Social CurrentsSeamster and Charron-Chénier
research-article2017
1The University of Tennessee, Knoxville, USA
2Duke University, Durham, NC, USA
Corresponding Author:
Raphaël Charron-Chénier, Department of Sociology,
Duke University, Soc/Psych Building, Box 90088,
Durham, NC 27708, USA.
Email: rc153@duke.edu
Predatory Inclusion and
Education Debt: Rethinking
the Racial Wealth Gap
Louise Seamster1 and Raphaël Charron-Chénier2
Abstract
Analyses of the recent surge in racial wealth inequality have tended to focus on changes in
asset holdings. Debt patterns, by contrast, have remained relatively unexplored. Using 2001
to 2013 data from the Survey of Consumer Finances, we show that after peaking in 2007,
racial inequalities for most debt types returned to prefinancial crisis levels. The exception has
been educational debt—on which we focus in this article. Our analyses show that educational
debt has increased substantially for blacks relative to whites in the past decade. Notably, this
unequal growth is not attributable to differences in educational attainment across racial groups.
Rather, and as we argue, this trend reflects a process of predatory inclusion—a process wherein
lenders and financial actors offer needed services to black households but on exploitative terms
that limit or eliminate their long-term benefits. Predatory inclusion, we propose, is one of the
mechanisms behind the persistence of racial inequality in contemporary markets.
Keywords
race, student debt, household debt, wealth, predatory inclusion
200 Social Currents 4(3)
but under conditions that jeopardize the benefits
of access. Indeed, processes of predatory inclu-
sion are often presented as providing marginal-
ized individuals with opportunities for social
and economic progress. In the long term, how-
ever, predatory inclusion reproduces inequality
and insecurity for some while allowing already-
dominant social actors to derive significant
profits.
Recent developments in the mortgage
lending industry provide a clear example of
predatory inclusion (Squires and Hyra 2010;
Williams, Nesiba, and McConnell 2005;
Wyly et al. 2009). Until the 1950s, blacks
were essentially excluded from mortgage
lending (Cohen 2003; Freund 2007) and have
since continued to experience barriers to
access (Bradford 1979; Wyly and Holloway
1999). In the 1990s, an emerging subprime
lending sector began offering underserved
black and Latino households with new oppor-
tunities for financing homeownership.
Subprime mortgages, however, entailed
much worse lending conditions than those
prevailing in the traditional sector (Faber
2013; Rugh, Albright, and Massey 2015).
These conditions contributed to waves of
home foreclosures, and ultimately jeopar-
dized homeownership’s value as a means of
wealth accumulation for black and Latino
borrowers (Rugh and Massey 2010; Squires
and Hyra 2010).
Predatory inclusion is, in our view, hardly
unique to housing markets. Similar dynamics
have emerged within the context of higher
education in the form of large and racially
patterned increases in student borrowing.
College education—like homeownership—is
an important tool of economic mobility in the
United States (Hout 2012; Torche 2011),
especially in the context of credential infla-
tion (Collins 1979; Cottom 2017). Yet much
like homeownership, obtaining a college edu-
cation can be prohibitively expensive for
those with limited economic resources to
begin with. This has been especially true in
recent years given the nearly 40 percent
increase in tuition costs since 1990 (Kena
et al. 2015). These growing costs have encour-
aged many students to rely on debt as a means
of financing education. Whether student debt
is a productive investment, however, remains
heavily debated.
To understand the potential consequences
of such debt, it is essential in our view to
consider its racial implications. As system-
atic and institutionalized racial inequalities
traverse nearly all social domains (Bonilla-
Silva 1997; Reskin 2012), it should perhaps
come as no surprise that student debt and the
terms of that debt likely entail greater finan-
cial obstacles and hardships for black than
for white borrowers. Because of lower aver-
age income and wealth levels, black borrow-
ers likely have to take on greater absolute and
relative debt levels than their white counter-
parts (Hamilton, Darity, Price, Sridharan &
Tippett 2015; Oliver and Shapiro 2006).
Risk-based pricing by private lenders also
means that blacks are more likely offered
poorer loan terms than whites on average
(Fourcade and Healy 2013; Loonin and
Cohen 2008).
Returns to college education are also lower
for blacks. Compared with whites, black col-
lege students have a lower completion rate
(Huelsman 2015), and, even among college
graduates, have lower earnings (Zhang 2008)
and a higher unemployment rate (Jones and
Schmitt 2014). Because of these disparities,
similar amounts of student debt likely repre-
sent a greater financial risk and yield lower
lifetime benefits for blacks. Student loans, in
other words, may allow an increasing number
of black students to pursue a college education,
but available evidence suggests that this occurs
in a context where differential returns yield
much lower returns than those experienced by
whites.
We tackle these issues below by estimating
overall debt and education debt holding for
black and white households while also briefly
considering whether increased educational
attainment for black households accounts for
the disproportionate increase in black student
debt. We then propose potential alternative
explanations for these patterns—explanations
that we hope will offer important guideposts
for future scholarship on this important and
contemporary issue.
Seamster and Charron-Chénier 201
Debt Trends for Black and
White Households,
2001–2013
Data and Method
Our estimates of household debt are calculated
using data from the Survey of Consumer
Finances (SCF), arguably the most complete
survey of household finances in the United
States. SCF data are collected at the household
level. This provides a significant advantage for
studying student debt holding in the overall
population because it captures older debt hold-
ers (approximately one third of student debt
holders are at least 40 years old; Brown et al.
2012) and debt taken on by students’ kin
(approximately 17 percent of parents take out
loans for their children; Austin 2013). All
household debt measures are taken from the
SCF Summary Extract Public Data and include
all outstanding loans as well as all loans under
deferment. All dollar amounts are reported in
constant 2013 dollars.
SCF data are collected through a dual-sam-
ple design combining a standard multistage
area-probability design and an oversample of
households expected to have higher than aver-
age wealth. To insure national representative-
ness, all descriptive statistics are adjusted
using SCF-provided sampling weights.
Missing data are imputed prior to public
release. We therefore report linearized stan-
dard errors that adjust for multiple imputa-
tions. All estimates were obtained using
multiple imputation and survey data estima-
tion commands in Stata 14 (StataCorp 2015).
Race in our analyses refers to the self-reported
race of the head of household, defined in the
SCF as the male partner in mixed-sex couples
or the older partner in same-sex couples.
Debt Patterns
Figure 1 reports household debt trends between
2001 and 2013. Using 2001 as a reference point,
one sees that household debt increased steadily
prior to the financial crisis for most major debt
types. This increase likely reflects greater credit
availability and was accompanied by a similar
increase in average household assets. After 2007,
however, debt holdings shrank for most debt
types and, in some cases—credit card and vehi-
cle debt—returned to 2001 levels. Fluctuation in
access to debt was especially notable for black
households. For example, average mortgage debt
for black households was almost 200 percent
higher in 2007 relative to 2001 (from about
$29,000 to about $57,000). By 2013, however,
black households’ average mortgage debt had
fallen back to about $34,000—a 40 percent drop
from the 2007 peak. By contrast, average mort-
gage debt for white households only increased by
40 percent between 2001 and 2007 (from about
$60,000 to about $84,000), and has fallen by only
about 10 percent since (reaching approximately
$75,000 in 2013).
The major exception to the debt pattern just
discussed is student debt. In contrast to gener-
ally falling debt levels after 2007, average
household education debt continued to expand
after the financial crisis, reaching more than
2.5 times its 2001 level by 2013. Like mort-
gage debt, patterns of educational debt vary
considerably by race. As Figure 2 shows, edu-
cational debt was similar across racial groups
until 2007 but has intensified more rapidly for
black compared with white households.1 Black
educational debt roughly tripled between 2001
and 2013, growing from $2,422 to $7,531 on
Figure 1. Average debt relative to 2001, all
households.
202 Social Currents 4(3)
average. As a result, black households had sig-
nificantly higher student debt levels than white
households in 2010 (about $2,000 more, p <
.05) and 2013 (about $1,800 more, p < .05).
This disparity is especially striking given that
blacks have lower debt levels than whites for
all other debt types (see Chiteji 2007 for simi-
lar findings in a younger sample).
This overall increase in average black edu-
cational debt over the period reflects an
increase in the number of black debt holders.
As Figure 3 shows, the proportion of black
households taking on educational debt more
than doubled between 2001 and 2013. Almost
one in three black households (32 percent)
held education debt in 2013, compared with
less than one in five (18 percent) white house-
holds. Average education debt for black
households reporting nonzero student debt
($15,000 in 2001, $23,000 in 2013) remains
lower than average debt for white households
with nonzero student debt ($18,500 in 2001,
$31,000 in 2013). Yet student debt represents
a greater share of black households’ debt bur-
den compared with white households. As
Figure 4 shows, educational debt now repre-
sents approximately 20 percent of black
households’ total debt, compared with only 6
percent in 2001.2 By contrast, whites’ educa-
tion debt only increased from 4 to 8 percent of
their total debt burden.
Changes in Educational Attainment
as a Potential Explanation
The most obvious explanation for an increase
in student debt for blacks would be a propor-
tional increase in the number of black students
pursuing postsecondary degrees. Enrollment at
two- and four-year institutions increased at a
Figure 2. Average student debt (in $1,000).
Figure 3. Proportion of households with any
student debt.
Figure 4. Student debt as a percentage of total
household debt.
Seamster and Charron-Chénier 203
faster rate for blacks than for whites between
2000 and 2014 (Snyder, de Brey, and Dillow
2016). Increases in enrollment have been par-
ticularly large for older black students, with
those above 35 years of age now twice as likely
as whites of the same age to be enrolled (Kena
et al. 2015). College enrollment is not mea-
sured in the SCF, but we can offer a prelimi-
nary test by examining the impact of changes
in educational attainment for black and white
households since 2000 on expected racial dis-
parities in student debt.
We do this by estimating a generalized lin-
ear model (GLM) of the following form:
logStudent Debt Black
Year BlackYear
Educ
kk
jk
i
()
=+ +
()
+
ββ
ββ
β
01
aationX
i++β
ε
where Education is a categorical variable
measuring educational attainment of the head
of household (less than high school, high
school, some college, college degree), Year is a
categorical variable indicating SCF survey
year, Xβ is a vector of control variables, and ε
is a normally distributed random error. We
obtain unique yearly estimates of the racial
gaps in student debt by interacting the Black
and the Year variables. The model controls for
household Income, Assets (financial and nonfi-
nancial), Size (the number of people in the
household), and Composition (single with chil-
dren, single without children and head of
household below 55 years of age, single with-
out children and head of household above 55
years of age, married or partnered with chil-
dren, married or partnered without children).
Models are estimated using an iteratively
reweighted least squares (IRLS) method.
Standard errors are adjusted to account for the
SCF’s multiple imputation procedure. Note
that because our model controls for assets, we
do not adjust regression estimates using sam-
pling weights. Using survey weights in this
context could lead to biased coefficient esti-
mates and inefficient standard errors (Winship
and Radbill 1994).
Figure 5 reports predicted racial gaps in stu-
dent debt from our GLM model. Gaps are
computed by holding all control variables con-
stant at their mean. A positive number indi-
cates that blacks had greater student debt than
whites for that year. We present results from
two model specifications. The first model
(“baseline”) provides estimates from a model
that includes all control variables but excludes
the Education variable. The second model
(“full”) adds the Education variable. In effect,
the full model provides estimates of racial gaps
in student debt assuming that educational
attainment for blacks and whites was the same
and constant across the whole period. Shaded
areas show confidence intervals, with the
darker ribbon indicating overlap.
Our findings suggest that educational attain-
ment and household socioeconomic character-
istics do not account for racial gaps in student
debt in any of the years considered. For all
years, estimated racial gaps from the full model
are not significantly different (at the .05 level)
from the estimated racial gaps from the base-
line model. Logistic regression models predict-
ing whether households have any student debt
and GLMs predicting student debt as a propor-
tion of total debt (not shown) yield substan-
tively similar results. Overall, these models
point to two conclusions. First, racial differ-
ences in income, assets, and family structure do
not explain blacks’ greater reliance on student
loans. Second, changes in educational attain-
ment for black and white households between
2000 and 2013 do not explain racial gaps in stu-
dent debt or their increase over time. Although
hardly a definitive evaluation of the role of
Figure 5. Predicted racial gaps in student debt
from GLMs.
Note. GLM = generalized linear model.
204 Social Currents 4(3)
student enrollment, the patterns reported do
offer evidence that increases in debt are likely
not attributable to increased educational cre-
dentials for black households.
Other Potential Explanations
Our estimates reported thus far indicate that
black households are now carrying more stu-
dent debt and that obvious individual-level
explanations—that is, racial disparities in
socioeconomic status or educational attain-
ment—fail to fully explain this trend. We pro-
pose instead that growing racial inequalities in
student debt are perhaps better understood as a
consequence of changing opportunities and
constraints in lending practices. Two specific
industry features in particular warrant much
more attention in our view: the growth of the
for-profit sector in postsecondary education
and the increased role of private lenders in the
educational loan market.
The for-profit sector in higher education is
one potential cause of black households’ grow-
ing student debt levels. Attendance at for-profit
degree-granting institutions increased almost
tenfold between 1995 and 2010 from 240,000
to 2,018,000 enrolled students (Gallup 2015),
while enrollment in nonprofit higher education
institutions remained largely stable. For-profit
colleges and universities impose higher costs
on students than similar public institutions
(Snyder et al. 2016), and importantly, enroll-
ment at for-profit institutions is racially pat-
terned. In 2012, for-profits captured 11 percent
of white undergraduate students, compared
with 21 percent of black undergraduates (esti-
mates obtained from the National Center for
Education Statistics’ [NCES] online data
retrieval tool, Datalab). Older undergraduate
students (aged 24 and above)—who are dis-
proportionately nonwhite—are also overrepre-
sented in for-profit schools (NCES Datalab).
These institutions also tend to disproportion-
ately enroll groups with dedicated federal edu-
cation benefits. In 2009–2010, for example,
for-profit institutions took in approximately a
fifth of all Pell Grants for low-income students
(Goldrick-Rab 2016), which were used by
about 60 percent of black students in 2011
(Ifill and Hufford 2015). For-profits also cap-
tured $1.7 billion in GI benefits in 2012–2013
alone (Health Education Labor and Pensions
Committee 2012).
Attendance at a for-profit institution is asso-
ciated with a greater likelihood of taking on
student debt. In 2012, almost 90 percent of stu-
dents at for-profit private colleges carried debt,
compared with around 65 percent at other four-
year schools (NCES Datalab). A 2012 govern-
ment report found that those graduating from
for-profits finished with median debt of
$32,700, compared with $24,600 for private
nonprofits (Avery and Turner 2012). Almost 40
percent of students at for-profit institutions in
1995 had defaulted on school loans by 2010,
compared with 20 percent of nonprofit attend-
ees (Health Education Labor and Pensions
Committee 2012). Part of the debt problem can
almost certainly be attributed to these differ-
ences in higher education enrollment and the
predatory character of for-profits.
Growth in private student lending over this
period similarly has likely played a role in
greater black indebtedness. Private loans tend
to be more costly and offer few of the protec-
tions associated with federal student loans
(TICAS 2016). Private borrowing nearly tri-
pled between 2003 and 2007 (Consumer
Financial Protection Bureau 2012). Private
borrowing had receded significantly by 2012
(down to 6 percent of all undergraduates) but
remained at levels higher than before the finan-
cial crisis (Looney and Yannelis 2015; TICAS
2016).
Important relative to the points above is the
fact that black students disproportionately
attend educational institutions that provide
insufficient information on federal loan eligi-
bility, leaving them more vulnerable to private
lenders (TICAS 2016). The private sector in
educational lending may in fact be developing
aggressive and risky lending tactics similar to
those seen in mortgage lending at the height of
the subprime bubble. Indeed, this is where we
suspect a significant part of the inequality-gen-
erating action is. For this reason, we hope that
future work will carefully assess the role of
for-profit institutions and private loans as core
drivers of the growing racial inequalities and
Seamster and Charron-Chénier 205
the intensifying indebtedness that black stu-
dents and their families face.
Discussion
Debt can have a positive impact on house-
holds’ long-term financial well-being and is
often understood as a sign of market incorpo-
ration and access to financial tools (Killewald
2013). The long-term benefits of debt and
credit, however, are likely not equal across
groups. Like other scholars who identify
exploitative “fringe” practices in mainstream
financial institutions (Faber 2013) and argue
that market incorporation can actually exacer-
bate group-based economic disparities (Negro,
Visentin, and Swaminathan 2014), we suggest
that predatory inclusion remains an important
cause of contemporary racial inequality.
Growing racial disparities in wealth and eco-
nomic standing, we believe, are not exclu-
sively an effect of past inequality reproduced
through intergenerational transfers. They
reflect contemporary institutional practices—
like predatory inclusion—that need to be care-
fully studied.
We proposed at the outset that growing
racial disparities in student debt reflect a new
and ongoing example of predatory inclusion.
Student borrowing allows otherwise-excluded
households to finance a college education.
Large amounts of student debt, however,
impose significant financial risks on these
households. This is especially true for blacks,
who have more precarious economic positions
overall, lower average returns to college
enrollment, greater enrollment at for-profit
educational institutions, and rely more on pri-
vate student loans. These factors mean that for
black households, growing student debt bur-
dens could likely reduce or even eliminate the
hoped-for financial stability a college degree is
traditionally seen as providing.
The consequences of growing disparities in
student debt for racial inequality are not yet clear
but may be profound. Unlike homeowners, stu-
dents cannot foreclose on their degrees and have
their debt liabilities wiped clean. Moreover,
and unlike the most recent predatory inclusion
episode—spawned by the development of
subprime mortgage lending—student debt levels
are unlikely to recede significantly.3 Student
debt is legally very difficult to discharge, even
when declaring bankruptcy (Austin 2013;
Pottow 2006). Defaulting on student loans also
does not prevent the government from garnish-
ing borrowers’ wages, taxes, and other benefits
(TICAS 2016). Although families carrying stu-
dent debt may be less likely to lose their lifetime
savings overnight—as happened in the foreclo-
sure crisis—households will potentially be per-
manently saddled with debt repayment
obligations that divert income from other uses
and make it hard to obtain loans for other pro-
ductive investments. The financial trends we
describe and the predatory dynamics undergird-
ing them demand greater research attention. If
nothing else, they suggest that in an unequal
society with racially marginalized groups, the
pursuit of opportunity itself can lead to harmful
unanticipated outcomes.
Declaration of Conflicting Interests
The author(s) declared no potential conflicts of
interest with respect to the research, authorship,
and/or publication of this article.
Funding
The author(s) received no financial support for the
research, authorship, and/or publication of this
article.
Notes
1. Trends in black education debt do not reflect
trends for nonwhite households in general.
Education debt levels for Hispanic households,
for example, were below those for white house-
holds through the entire 2001 to 2013 period
and show virtually no growth after 2007.
2. These changes do not simply reflect falling
mortgage debt over the period. Total student
debt for black households as a portion of
nonmortgage debt was 9 percent in 2001 and
increased to 24 percent in 2013.
3. The Obama Administration has recently made
several positive modifications to the fed-
eral loan program, including direct loans and
income-based repayment. Without universal
enrollment in the latter, however, these changes
could potentially exacerbate racial differences
in debt.
206 Social Currents 4(3)
References
Austin, Daniel A. 2013. “The Indentured Generation:
Bankruptcy and Student Loan Debt.” Santa
Clara Law Review 53(329):330–420.
Avery, Christopher and Sarah Turner. 2012.
“Student Loans: Do College Students Borrow
Too Much—Or Not Enough?” Journal of
Economic Perspectives 26(1):165–92.
Bonilla-Silva, Eduardo. 1997. “Rethinking Racism:
Toward a Structural Interpretation.” American
Sociological Review 62(3):465–80.
Bradford, Calvin. 1979. “Financing Home
Ownership: The Federal Role in Neighborhood
Decline.” Urban Affairs Review 14(3):313–35.
Brown, Meta, Andrew Haughwout, Donghoon Lee,
Maricar Mabutas, and Wilbert van der Klaauw.
2012. “Grading Student Loans.” Liberty Street
Economics Blog. New York: Federal Reserve
Bank of New York.
Chiteji, Ngina S. 2007. “To Have and to Hold: An
Analysis of Young Adult Debt.” Pp. 231–58 in
The Price of Independence: The Economics of
Early Adulthood, edited by Sheldon Danziger
and Cecilia Rouse. New York: Russell Sage.
Cohen, Lizabeth. 2003. A Consumers’ Republic:
The Politics of Mass Consumption in Postwar
America. New York: Knopf.
Collins, Randall. 1979. The Credential Society:
An Historical Sociology of Education and
Stratification. New York: Academic Press.
Consumer Financial Protection Bureau. 2012.
Private Student Loans.” Report to the Senate
Committee on Banking, Housing, and Urban
Affairs, the Senate Committee on Health,
Education, Labor, and Pensions, the House
of Representatives Committee on Financial
Services, and the House of Representatives
Committee on Education and the Workforce,
29 August. Washington, DC.
Cottom, Tressie McMillan. 2017. Lower Ed: The
Troubling Rise of For-profit Colleges in the
New Economy. New York: The New Press.
Faber, Jacob W. 2013. “Racial Dynamics of
Subprime Mortgage Lending at the Peak.”
Housing Policy Debate 23(2):328–49.
Fourcade, Marion and Kieran Healy. 2013.
“Classification Situations: Life-chances in the
Neoliberal Era.” Accounting, Organizations
and Society 38(8):559–72.
Freund, David M. P. 2007. Colored Property: State
Policy and White Racial Politics in Suburban
America. Chicago, IL: University of Chicago
Press.
Gallup. 2015. “Great Jobs, Great Lives: The
Relationship between Student Debt, Experiences
and Perceptions of College Worth.” Gallup-
Purdue Index 2015 Report. Retrieved December
22, 2016 (http://www.wfyi.org/files/wfyi/files/
gpi-report-2015-09-25-2015.pdf).
Goldrick-Rab, Sara. 2016. Paying the Price: College
Costs, Financial Aid, and the Betrayal of the
American Dream. Chicago, IL: University of
Chicago Press.
Hamilton, Darrick, William A. Darity, Anne E.
Price, Vishnu Sridharan and Rebecca Tippett.
2015. “Umbrellas Don’t Make It Rain: Why
Studying and Working Hard Isn’t Enough for
Black Americans.” Oakland, CA: Insight Center
for Community Economic Development.
Health Education Labor and Pensions Committee.
2012. “For Profit Higher Education: The
Failure to Safeguard the Federal Investment
and Ensure Student Success.” Washington,
DC: United States Senate.
Hout, Michael. 2012. “Social and Economic
Returns to College Education in the United
States.” Annual Review of Sociology 38(1):
379–400.
Huelsman, Mark. 2015. “The Debt Divide: The
Racial and Class Bias behind the ‘New Normal’
of Student Borrowing.” New York: Demos.
Ifill, Nicole and Justine Hufford. 2015. “Trends
in Pell Grant Receipt and the Characteristics
of Pell Grant Recipients: Selected Years,
1999–2000 to 2011–12.” Washington, DC:
National Center for Education Statistics, U.S.
Department of Education.
Jones, Janelle and John Schmitt. 2014. “A College
Degree Is No Guarantee.” Washington, DC:
Center for Economic and Policy Research.
Kena, Grace, Lauren Musu-Gillete, Jennifer
Robinson, Xiaolei Wang, Amy Rathbun,
Jijun Zhang, Sidney Wilkinson-Flicker, Amy
Barmer, and Erin Dunlop Velez. 2015. “The
Condition of Education 2015.” Washington,
DC: U.S. Department of Education.
Killewald, Alexandra. 2013. “Return to Being Black,
Living in the Red: A Race Gap in Wealth That
Goes beyond Social Origins.” Demography
50:1177–95.
Looney, Adam and 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. Washington, DC: The
Brookings Institution.
Seamster and Charron-Chénier 207
Loonin, Deanne and Alys Cohen. 2008. “Paying
the Price: The High Cost of Private Student
Loans and the Dangers for Student Borrowers.”
Boston, MA: National Consumer Law Center.
Negro, Giacomo, Fabiana Visentin, and Anand
Swaminathan. 2014. “Resource Partitioning
and the Organizational Dynamics of ‘Fringe
Banking.’” American Sociological Review
79(4):680–704.
Oliver, Melvin and Thomas Shapiro. 2006. Black
Wealth / White Wealth: A New Perspective
on Racial Inequality, 2nd Edition. New York:
Routledge.
Pfeffer, Fabian T., Sheldon Danziger, and Robert
F. Schoeni. 2013. “Wealth Disparities before
and after the Great Recession.” The ANNALS of
the American Academy of Political and Social
Science 650(1):98–123.
Pottow, John. 2006. “The Nondischargeability
of Student Loans in Personal Bankruptcy
Proceedings: The Search for a Theory.”
Canadian Business Law Journal 44:245.
Reskin, Barbara. 2012. “The Race Discrimination
System.” Annual Review of Sociology
38(1):17–35.
Rugh, Jacob S., Len Albright, and Douglas S.
Massey. 2015. “Race, Space, and Cumulative
Disadvantage: A Case Study of the Subprime
Lending Collapse.” Social Problems 62:
186–218.
Rugh, Jacob S. and Douglas S. Massey. 2010.
“Racial Segregation and the American
Foreclosure Crisis.” American Sociological
Review 75(5):629–51.
Snyder, Thomas D., Cristobal de Brey, and Sally A.
Dillow. 2016. “Digest of Education Statistics,
2014.” Washington, DC: U.S. Department
of Education, National Center for Education
Statistics.
Squires, Gregory D. and Derek S. Hyra. 2010.
“Foreclosures—Yesterday, Today, and
Tomorrow.” City & Community 9(1):50–60.
StataCorp. 2015. Stata Statistical Software: Release
14. College Station, TX: StataCorp LP.
The Institute for College Access and Success
(TICAS). 2016. “Private Loans: Facts and
Trends.” Washington, DC: The Institute for
College Access and Success.
Torche, Florencia. 2011. “Is a College Degree
Still the Great Equalizer? Intergenerational
Mobility across Levels of Schooling in the
United States.” American Journal of Sociology
117(3):763–807.
Williams, Richard, Reynold Nesiba, and Eileen
Diaz McConnell. 2005. “The Changing Face of
Inequality in Home Mortgage Lending.” Social
Problems 52(2):181–208.
Winship, Christopher and Larry Radbill. 1994.
“Sampling Weights and Regression Analysis.”
Sociological Methods & Research 23(2):230–
57.
Wyly, Elvin K. and Steven R. Holloway. 1999.
“‘The Color of Money’ revisited: Racial lend-
ing patterns in Atlanta’s neighborhoods.”
Housing Policy Debate 10(3):555–600.
Wyly, Elvin K., Markus Moos, Daniel Hammel, and
Emanuel Kabahizi. 2009. “Cartographies of
Race and Class: Mapping the Class-Monopoly
Rents of American Subprime Mortgage
Capital.” International Journal of Urban and
Regional Research 33(2):332–54.
Zhang, Liang. 2008. “Gender and Racial Gaps in
Earnings among Recent College Graduates.”
The Review of Higher Education 32(1):51–72.
... Friedman 2019). Although student debt currently clouds the future economic prospects of an entire generation (Zaloom 2019;Goerisch 2021), low-income, women, first-generation, and racialized borrowers-Hispanic and Black people in particular-disproportionately bear its impacts (Seamster and Charron-Ch enier 2017). With education central to the production of identities, labor market advantages, and, ultimately, class position in U.S. society (Nguyen, Cohen, and Huff 2017;Mitchell 2018;Cockayne 2020), the lure of finding alternative ways to finance higher education has continued to push students into harmful financial situations and predatory arrangements. ...
... ISAs are also gaining popularity across the globe (Kreighbaum 2019;Hayes and Milton 2020). Yet as CBPPE's findings highlight, ISAs' promise of expanding access to higher education financing can mask practices of "predatory inclusion," described by Seamster and Charron-Ch enier (2017) as financial products "whereby members of a marginalized group are provided with access to a good, service, or opportunity from which they have historically been excluded but under conditions that jeopardize the benefits" (199). This mirrors Hayes and Milton's (2020) description of reverse redlining, in which debt products are targeted at a marginalized population with "relatively complicated financial transaction[s] designed to take advantage of vulnerable consumers' misunderstanding and, often, misplaced trust of access" (8). ...
... Given the debt relations at play within the higher education landscape more broadly, these trends are likely indicative of dynamics at play at four-year HEIs as well. ISAs are thus an illustrative example of the impact of debt relations on the tightly bound connection between education and work-relations that are at the top of mind for students throughout the educational landscape (Seamster and Charron-Ch enier 2017;Zaloom 2019). ...
Article
Full-text available
As student debt in the United States rose to $1.7 trillion in 2021, the value and accessibility of higher education has been a subject of fierce public debate. In this context, income share agreements (ISAs) are framed as an alternative to conventional student loans. ISAs entail investors paying a student’s tuition in exchange for a share of the student’s future income. As the use of ISAs increases, especially within U.S. vocational schools, there is evidence that ISAs have used predatory financial practices aimed at marginalized students. Motivated by the rapid growth of ISAs in the United States and the relative absence of geographic attention to them, this article discusses their nature and broader significance to geographic debates. Informed by gray literature, news articles, industry documents, and the scant academic writing on ISAs, we discuss the characteristics, histories, and geographies of ISAs before examining the roles and motivations of three involved constituencies: students, higher education institutions, and investment intermediaries. In doing so, we highlight how ISAs reorient who pays for education and when, what sort of education is paid for, and how private markets profit from higher education. We then highlight the broader significance of ISAs to geographical understandings of (1) the financialization of social reproduction, (2) geographies of education, and (3) digital capitalism. We argue that ISAs’ individuating logics and broader context of social reproductive crises are revealing of a wider trend toward private profit via predatory inclusion, accelerated by financial technologies. 随着2021年美国学生债务增至1.7万亿美元, 高等教育的价值和可及性成为公众激烈辩论的话题。在这种情况下, “收入分成协议”(ISA)被认为是传统学生贷款的替代方案。ISA要求投资者支付学生的学费, 以换取学生未来的部分收入。随着ISA(尤其是在美国职业培训学校)的普及, 有证据表明ISA采取了针对边缘化学生的掠夺性金融措施。鉴于ISA在美国的快速增长、地理学相对缺乏对ISA的研究, 本文讨论了ISA的性质以及ISA对地理争论的重要性。根据灰色文献、新闻文章、行业文档和少量ISA学术文章, 我们讨论了ISA的特点、历史和地理, 审视了学生、高等教育机构和投资中介这三个群体的作用和动机。强调了ISA如何重新定义了谁为教育付费、何时付费、为哪种教育付费, 以及私人市场如何从高等教育中获利。然后, 为了从地理学角度去理解社会再生产金融化、教育地理和数字资本主义, 我们强调了ISA的重要性。我们认为, ISA的个性化逻辑及其社会再生产危机背景, 揭示了通过掠夺性接纳去实现私人利润的趋势, 而金融技术则加剧了这种趋势。 Al tiempo que la deuda estudiantil en Estados Unidos ascendió a 1.7 trillones de dólares [sistema monetario norteamericano] en 2021, el valor y la accesibilidad a la educación superior han sido objeto de un intenso debate público. En este contexto, los acuerdos de participación en los ingresos (ISA) se presentan como una alternativa a los préstamos estudiantiles convencionales. Los ISA implican que los inversores le paguen la matrícula al estudiante a cambio de una parte de sus futuros ingresos. A medida que aumenta el uso de las ISA, especialmente en las escuelas de formación vocacional de Estados Unidos, existen pruebas de que aplicando tal sistema se han utilizado prácticas financieras depredadoras dirigidas a los estudiantes marginados. Motivado por el rápido crecimiento de las ISA en Estados Unidos, y la relativa ausencia de atención geográfica a las mismas, este artículo discute su naturaleza y su significancia más amplia para los debates geográficos. Basándonos en la literatura gris, crónicas de prensa, documentos de la industria y los escasos escritos académicos sobre las ISA, analizamos las características, las historias y las geografías de las ISA, antes de examinar las funciones y las motivaciones de tres grupos implicados: los estudiantes, las instituciones de educación superior y los intermediarios de inversión. Haciendo esto, destacamos el modo como los AIS reorientan el quién paga la educación y cuándo, qué tipo de educación se paga y cómo –los mercados privados lucrándose con la educación superior. Después, destacamos el valor más amplio de las AIS para la comprensión geográfica de (1) la financiación de la reproducción social, (2) las geografías de la educación y (3) el capitalismo digital. Sostenemos que las lógicas de individualización de los AIS y el contexto más amplio de las crisis de reproducción social son indicios de una tendencia más amplia hacia el beneficio privado a través de una inclusión depredadora, acelerada por las tecnologías financieras.
... Digital platforms are often appealing to the disadvantaged because they appear to offer access to historically exclusive institutions and spaces. Marginalized consumer-citizens are pressured to engage in "ostensibly democratizing mobility schemes on extractive terms"-what Cottom (2020a:443) and Seamster and Charron-Chénier (2017) describe as "predatory inclusion." Inclusion is predatory because digital platforms produce profit for lenders, real estate brokers, banks, corporations, private equity firms, and other powerful social entities, in part through the financial exploitation of racially marginalized groups and communities who fail to see substantial benefit in the aggregate (Cottom 2020a). ...
... Notably, predatory inclusion in higher education does not need to feel bad or seem obviously extractive to those involved, as it taps into human desires for status, belonging, and self-improvement (Cottom 2020a). This does not change the fact that "inclusion" for marginalized groups often comes with fewer benefits and different costs than for others (Seamster and Charron-Chénier 2017). ...
Article
The rapid rise of online enrollments in public universities has been fueled by a reliance on for-profit, third-party providers—especially online program managers. However, scholars know very little about the potential problems with this arrangement. We conduct a mixed methods analysis of 229 contracts between third-party providers and 117 two-year and four-year public universities in the US, data on the financing structure of third-party providers, and university online education webpages. We ask: What are the mechanisms through which third-party relationships with universities may be exploitative of students or the public universities that serve them? To what extent are potentially predatory processes linked to the private equity and venture capital financing structure of third-party providers? We highlight specific mechanisms that lead to five predatory processes: the targeting of marginalized students, extraction of revenue, privatization by obfuscation, for-profit creep, and university captivity. We demonstrate that contracts with private equity and venture capital financed third-party providers are more likely to include potentially problematic contract stipulations. We ground our findings in a growing body of work on “platform capitalism” and include recommendations for state universities, accreditors, and federal policy.
... Brands increasingly acknowledge societal racial exclusion and stand up for racial justice by taking on the role of "advocate" for systemic change (Menon and Kiesler 2020;Sibai, Mimoun, and Boukis 2021). Strategies such as promoting markets as multicultural spaces and selling diversity amplify ethno-racial consumers' recognition in the market (Harrison, Thomas, and Cross 2017 expand and control their participation in the market, therefore circumscribing long-term benefits (Seamster and Charron-Chénier 2017). Thus, these efforts result in token forms of participation, which means that while racialized market actors may gain perfunctory representation and/or a subordinate level of market access, this is often without remediation of resource redistribution inequalities. ...
Article
Full-text available
Ethno-racial minorities are often racialized and consequently excluded from various consumption contexts. Racialized market actors strive to overcome exclusion and gain participation in markets; however, these efforts are often insufficient because they cannot create equitable access to market resources, fair opportunities for voice, and empowerment to shape market practices. Our research identifies digital enclave movements as a unique means by which racialized market actors redirect their resources and mobilize digital network tools to participate in markets. Using a qualitative study of the digital enclave #MyBlackReceipt, we explore tactics supporting the formation and sustenance of digital enclaves and how they support participation in markets. We identify five tactics that racialized market actors employ to foster digital enclaves and enhance market participation: legitimizing, delimitating, vitalizing, manifesting, and bridging. Last, we provide recommendations for policymakers on how to support and foster more equitable participation of ethnic minority groups in markets while addressing the risks of radicalization and the backlash related to enclaves.
... However, for-profit higher education companies/institutions provide access to education but at a steep and inequitable cost (McMillan Cottom, 2020). This constitutes a form of "predatory inclusion" in which marginalized consumers are exploited under the guise of providing a path to financial freedom (Seamster & Charron-Chénier, 2017). Thus, from a sociological perspective, money is not only a resource to be leveraged; it also reifies the social products, processes, and relations needed to attain financial well-being (Swartz, 2020). ...
Article
Full-text available
Digital financial platforms have become an integral part of consumers’ lives–resulting in the datafication of everyday life and potential for uniquely impacting financial well‐being. Extending previous transformative consumer research, we suggest financial well‐being must center the ways digital financial platforms and their resulting data are increasingly enmeshed with financial decision making and consumption. Drawing on a theoretical lens of platformization, we propose the Platformed Money Ecosystem, which accounts for increased embeddedness of digital financial platforms within consumers’ lives and the subtlety of how everyday life is transformed into data: producing data at the micro‐level, monetizing data at the meso‐level, and regulating data at the macro‐level. In conceptualizing the Platformed Money Ecosystem, we identify three data‐informed considerations for scholars and policymakers to reimagine financial well‐being: protecting consumer data, limiting data biases, and supporting data literacy.
Article
Full-text available
In the United States, SNAP was made available to refugees in 1977, and most refugees rely heavily on SNAP to sustain themselves before becoming self-reliant. Knowledge of sociodemographic factors and chronic debilitating conditions related to receiving SNAP benefits among refugees is limited. This study aimed to examine sociodemographic factors and chronic debilitating conditions associated with receiving SNAP benefits among refugees resettled in the United States. This study used a cross-sectional, nationally representative sample (n=6,100) of the refugees who entered the U.S. between 2013 and 2017. The data were obtained from the 2018 Annual Survey of Refugees (ASR) from participants aged 16 years or older who completed telephone interviews. The associations between receiving SNAP benefits (no/yes), and sociodemographic factors and chronic debilitating conditions were examined using logistic regression analysis. The main results showed that female gender, having an Iraq or Somalian refugee status, entering the United States between 2015 and 2017 or later, and having chronic debilitating conditions were associated with a higher likelihood of receiving SNAP benefits. Additionally, refugees whose English proficiency was "poor", aged 18 to 55 or older, unmarried, employed and resettled in the South, Midwest, or West were associated with a lower likelihood of receiving SNAP benefits. SNAP helps many refugees to receive nutrition assistance during their early resettlement phase. Participating in English and other empowering programs can lead to knowledge about available public programs, but limited English may slow integration and lead to lower income and continuous dependence on public programs, such as SNAP.
Article
Full-text available
In the United States, SNAP was made available to refugees in 1977, and most refugees rely heavily on SNAP to sustain themselves before becoming self-reliant. Knowledge of sociodemographic factors and chronic debilitating conditions related to receiving SNAP benefits among refugees is limited. This study aimed to examine sociodemographic factors and chronic debilitating conditions associated with receiving SNAP benefits among refugees resettled in the United States. This study used a cross-sectional, nationally representative sample (n=6,100) of the refugees who entered the U.S. between 2013 and 2017. The data were obtained from the 2018 Annual Survey of Refugees (ASR) from participants aged 16 years or older who completed telephone interviews. The associations between receiving SNAP benefits (no/yes), and sociodemographic factors and chronic debilitating conditions were examined using logistic regression analysis. The main results showed that female gender, having an Iraq or Somalian refugee status, entering the United States between 2015 and 2017 or later, and having chronic debilitating conditions were associated with a higher likelihood of receiving SNAP benefits. Additionally, refugees whose English proficiency was "poor", aged 18 to 55 or older, unmarried, employed and resettled in the South, Midwest, or West were associated with a lower likelihood of receiving SNAP benefits. SNAP helps many refugees to receive nutrition assistance during their early resettlement phase. Participating in English and other empowering programs can lead to knowledge about available public programs, but limited English may slow integration and lead to lower income and continuous dependence on public programs, such as SNAP.
Chapter
The contributors to Colonial Racial Capitalism consider anti-Blackness, human commodification, and slave labor alongside the history of Indigenous dispossession and the uneven development of colonized lands across the globe. They demonstrate the co-constitution and entanglement of slavery and colonialism from the conquest of the New World through industrial capitalism to contemporary financial capitalism. Among other topics, the essays explore the historical suturing of Blackness and Black people to debt, the violence of uranium mining on Indigenous lands in Canada and the Belgian Congo, how municipal property assessment and waste management software encodes and produces racial difference, how Puerto Rican police crackdowns on protestors in 2010 and 2011 drew on decades of policing racially and economically marginalized people, and how historic sites in Los Angeles County narrate the Mexican-American War in ways that occlude the war’s imperialist groundings. The volume’s analytic of colonial racial capitalism opens new frameworks for understanding the persistence of violence, precarity, and inequality in modern society. Contributors. Joanne Barker, Jodi A. Byrd, Lisa Marie Cacho, Michael Dawson, Iyko Day, Ruth Wilson Gilmore, Alyosha Goldstein, Cheryl I. Harris, Kimberly Kay Hoang, Brian Jordan Jefferson, Susan Koshy, Marisol LeBrón, Jodi Melamed, Laura Pulido
Article
Protection rent is a helpful concept for understanding the role of violence in the racialized stratification of wealth accumulation. In the USA, persons institutionally classified as white have faced lower prices for protection from violence than have persons classified as non-white. Thus, whites have received protection rents that have systematically increased their accumulated wealth. Historian of medieval Venice, Frederic Lane created the concept of protection rent to describe the economic advantage that some economic actors enjoyed over others as a result of paying a lower price for protection from the purveyor of force with which they were aligned. This article applies Lane’s concept of protection rent to the variable cost of protection faced by economic actors in the USA, where racialization is associated with significant differences in wealth accumulation.
Article
Support for higher education is a known and well‐documented venue for financial transfers within families, but practices of family support beyond college are less understood. Drawing on interviews with recent master's degree recipients who have student debt, I find key class differences in the process and forms of family financial assistance for graduate and professional education. Working‐class young adults receive clear, mainly in‐kind “business as usual” support that, while limited, is consistent with both expectations and prior support with undergraduate education. In contrast, despite proclamations of financial independence after college, young adults from middle‐class backgrounds engage in an emotional “dance” of family assistance. They field ambiguous offers of support which often evolve into substantial financial transfers and receive that financial support with ambivalence, which minimizes the existence of support and their own agency in receiving it. This article illustrates how, even with anxiety and uncertainty in place of strategic institutional navigation, middle‐class families transmit economic advantages that facilitate social reproduction. Rather than being a discrete, automatic transfer, intergenerational wealth transmission is contextual and comprised of everyday, relational processes.
Article
Full-text available
In this article, we describe how residential segregation and individual racial disparities generate racialized patterns of subprime lending and lead to financial loss among black borrowers in segregated cities. We conceptualize race as a cumulative disadvantage because of its direct and indirect effects on socioeconomic status at the individual and neighborhood levels, with consequences that reverberate across a borrower's life and between generations. Using Baltimore, Maryland as a case study setting, we combine data from reports filed under the Home Mortgage Disclosure Act with additional loan-level data from mortgage-backed securities. We find that race and neighborhood racial segregation are critical factors explaining black disadvantage across successive stages in the process of lending and foreclosure, controlling for differences in borrower credit scores, income, occupancy status, and loan-to-value ratios. We analyze the cumulative cost of predatory lending to black borrowers in terms of reduced disposable income and lost wealth. We find the cost to be substantial. Black borrowers paid an estimated additional 5 to 11 percent in monthly payments and those that completed foreclosure in the sample lost an excess of $2 million in home equity. These costs were magnified in mostly black neighborhoods and in turn heavily concentrated in communities of color. By elucidating the mechanisms that link black segregation to discrimination we demonstrate how processes of cumulative disadvantage continue to undermine black socioeconomic status in the United States today.
Article
This paper examines the rise in student loan default and delinquency. It draws on a unique set of administrative data on federal student borrowing matched to earnings records from de-identified tax records. Most of the increase in default is associated with borrowers at for-profit schools, 2-year institutions, and certain other nonselective institutions. Historically, students at these institutions have constituted a small share of all student borrowers. These nontraditional borrowers have largely come from lower-income families, attended institutions with relatively weak educational outcomes, faced poor labor market outcomes after leaving school, and defaulted at high rates. In contrast, default rates have remained low among borrowers who attended most 4-year public and nonprofit private institutions and among graduate school borrowers who collectively represent the vast majority of the federal loan portfolio despite the severe recession and these borrowers' relatively high loan balances. The higher earnings, low rates of unemployment, and greater family resources of this latter category of borrowers appear to have helped them avoid adverse loan outcomes even during times of hardship. Decomposition analysis indicates that changes in the characteristics of borrowers and the institutions they attended are associated with much of the doubling in default rates between 2000 and 2011, with changes in the type of schools attended, debt burdens, and labor market outcomes explaining the largest share.
Article
A quarter century ago, an important finding in stratification research showed that the intergenerational occupational association was much weaker among college graduates than among those with lower levels of education. This article provides a comprehensive assessment of the "meritocratic power" of a college degree. Drawing on five longitudinal data sets, the author analyzes intergenerational mobility in terms of class, occupational status, earnings, and household income for men and women. Findings indicate that the intergenerational association is strong among those with low educational attainment; it weakens or disappears among bachelor's degree holders but reemerges among those with advanced degrees, leading to a U-shaped pattern of parental influence. Educational and labor market factors explain these differences in mobility: parental resources influence college selectivity, field of study, and earnings more strongly for advanced-degree holders than for those with a bachelor's degree alone.
Article
Subprime mortgage lending in the early 2000s was a leading cause of the Great Recession. From 2003 to 2006, subprime loans jumped from 7.6% of the mortgage market to 20.1%, with black and Latino borrowers receiving a disproportionate share. This article leveraged the Home Mortgage Disclosure Act data and multinomial regression to model home-purchase mortgage lending in 2006, the peak of the housing boom. The findings expose a complicated story of race and income. Consistent with previous research, blacks and Latinos were more likely and Asians less likely to receive subprime loans than whites were. Income was positively associated with receipt of subprime loans for minorities, whereas the opposite was true for whites. When expensive (jumbo) loans were excluded from the sample, regressions found an even stronger, positive association between income and subprime likelihood for minorities, supporting the theory that wealthier minorities were targeted for subprime loans when they could have qualified for prime loans. This finding also provides another example of an aspect of American life in which minorities are unable to leverage higher class position in the same way as whites are. Contrary to previous research, model estimates did not find that borrowers paid a penalty (in increased likelihood of subprime outcome) for buying homes in minority communities.
Article
We examine the emergence and proliferation of payday lenders, fringe businesses that provide small short-term, but high-cost loans. We link the organizational dynamics of these businesses to two trends in consumer lending in the United States: the continuing consolidation of mainstream financial institutions; and the expansion of such institutions in the provision of financial services regarded as similar to payday loans. We explain the coexistence in mature industries of large-scale organizations in the market center and smaller specialists in the periphery by testing and extending the organizational model of resource partitioning. Our focus is on two under-examined aspects of the model: the dynamic underlying the partitioning process, and the conditions under which the market remains partitioned. The empirical analysis covers payday lenders, banks, and credit unions operating in Wisconsin between 1994 and 2008.
Article
This article examines the stratifying effects of economic classifications. We argue that in the neoliberal era market institutions increasingly use actuarial techniques to split and sort individuals into classification situations that shape life-chances. While this is a general and increasingly pervasive process, our main empirical illustration comes from the transformation of the credit market in the United States. This market works as both as a leveling force and as a condenser of new forms of social difference. The U.S. banking and credit system has greatly broadened its scope over the past twenty years to incorporate previously excluded groups. We observe this leveling tendency in the expansion of credit amongst lower-income households, the systematization of overdraft protections, and the unexpected and rapid growth of the fringe banking sector. But while access to credit has democratized, it has also differentiated. Scoring technologies classify and price people according to credit risk. This has allowed multiple new distinctions to be made amongst the creditworthy, as scores get attached to different interest rates and loan structures. Scores have also expanded into markets beyond consumer credit, such as insurance, real estate, employment, and elsewhere. The result is a cumulative pattern of advantage and disadvantage with both objectively measured and subjectively experienced aspects. We argue these private classificatory tools are increasingly central to the generation of “market-situations”, and thus an important and overlooked force that structures individual life-chances. In short, classification situations may have become the engine of modern class situations.