Race, Educational Loans, and Bankruptcy
Year: 2010
Type: preprint
Abstract: This article reports new data from the 2007 Consumer Bankruptcy Project revealing that as a group, college graduates, and specifically, white graduates are less likely to file for bankruptcy than their counterparts without a diploma. So it appears that a college education acts as an economic insurance policy of sorts against the setbacks that sometimes lead to financial hardship as measured by bankruptcy. But, the data also indicate that education does not help everyone equally. Unlike white college graduates, who are underrepresented in bankruptcy relative to their proportion in the general population, African American college graduates are equally likely to file for bankruptcy as African Americans without a college diploma. Thus, a college education may not confer the same protective benefit against financial hardship for African Americans that it does for their white counterparts. These findings highlight the tension between two federal policies with respect to educational attainment: educational lending policy that encourages Americans to take on debt to finance their educations and bankruptcy policy that makes discharge of such loans practically impossible. Indeed, these data suggest that African Americans may experience Congress’s restrictive educational loan discharge policy more acutely than whites because African Americans are more likely to borrow money for college, are bound by the same duty to repay educational loans, and yet do not experience the same benefits of the education. Ultimately, these educational loan policies may reveal a judgment, however inadvertent, about who, as a practical matter, should and who should not be going to college. More troubling is that this judgment seems to track socioeconomic and racial divisions. Accordingly, this article considers whether these findings should persuade Congress to reformulate its policy on the discharge of educational loans in bankruptcy or alternatively, to change the manner in which it supports educational attainment.
Source: SSRN Electronic Journal
Author: Abbye Atkinson
Institution: University of California, Berkeley
Language: English
Subfield: Law
Field: Social Sciences
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W1964614