Inequality in high-cost borrowing and unemployment insurance generosity in US states during the COVID-19 pandemic.

US consumers may turn to the private market for credit when income and government benefits fall short. The most vulnerable consumers have access only to the highest-cost loans. Prior research on trade-offs of credit with government welfare support cannot distinguish between distinct forms of unsecured credit due to data limitations. Here we provide insight on credit-welfare state trade-offs vis-à-vis unemployment insurance generosity by leveraging a large sample of credit data that allow us to separate credit cards, personal loans and alternative financial services loans and to analyse heterogeneity in credit use by household income. We find that more generous state unemployment insurance benefits were associated with a lower probability of high-cost credit use during the first seven quarters of the coronavirus disease 2019 (COVID-19) pandemic. This inverse association was concentrated among consumers living in low-income households. Our results support theories that public benefits are inversely associated with the use of costly credit.

Financial Stress, Race, and Student Debt during the Great Recession.

As the onus of paying for higher education shifted from the state onto students and their families, student indebtedness grew across a wide range of households in the United States in the 2000s, especially among Black and Hispanic households. Holding student debt is a financial risk that may leave households more vulnerable to economic shocks. We study the relationship between household student loan burden and the likelihood of financial stress during the Great Recession using the unique 2007-2009 panel of the Survey of Consumer Finances. We find a robust positive relationship across four dimensions of student loan burden and holding constant household characteristics and previous financial stress. We find that Black and Hispanic households who held student loans experienced particularly high levels of financial stress relative to White households. Our results demonstrate the importance of considering the household risk incurred in the US system of financed attainment, especially during the inevitable downturns of a capitalist economy.

The Accumulation of Disadvantage: Criminal Justice Contact, Credit, and Debt in the Transition to Adulthood.

Social exclusion of those with criminal justice experience increasingly includes a financial component, but the structure of disadvantage in credit and debt remains unclear. We develop a model of financial disadvantage in debt-holding during the transition to adulthood among justice-involved groups. We study cumulative criminal justice contact and debt holding by age thirty using the NLSY97. We follow life-course theory and understand this Millennial cohort as transitioning to adulthood during an era of historically high criminal justice contact, with many experiencing arrests, convictions, and incarceration. We develop a distinct measurement approach to cumulative criminal justice contact by age thirty that captures variation between young adults in the severity of justice encounters in the early life course. We conceptualize financial disadvantage as a lower likelihood of holding debt that facilitates property and attainment investments and a higher likelihood of holding higher-cost debts used for consumption or emergencies. We find that those with the most punitive criminal justice contact evidence the most disadvantageous form of debt holding, exacerbating social exclusion. We consider the implications of the accumulation of financial disadvantage for our understanding of criminal justice contact as a life-course process that will continue to shape the Millennial cohort's future trajectory.

Mortgage worries: young adults and the US housing crisis.

The 2008 housing crisis and the changes in lending practices that led up to it shook the status of home loans as secure debt in the United States. The crisis hit during a time when many young adults had recently bought their first home, making it a particularly consequential moment in their homeownership career. We investigate the effects of the housing crisis on the mental health of young homeowners using longitudinal data. We model levels of anxiety among young homeowners carrying mortgage debt before and after the recession as an early indicator of how the crisis affected the experience of home loans. The positive effects of being a mortgaged homeowner before the recession declined significantly after the housing crisis. We discuss whether this shift may portend a longer-term shift in American beliefs in the value of investing in housing, with significant implications for financial well-being and wealth stratification.

Can't afford a baby? Debt and young Americans.

This article explores the role of personal debt in the transition to parenthood. We analyze data from the National Longitudinal Study of Youth-1997 cohort and find that for the generation coming of age in the 2000s, student loans delay fertility for women, particularly at very high levels of debt. Home mortgages and credit card debt, in contrast, appear to be precursors to parenthood. These results indicate that different forms of debt have different implications for early adulthood transitions: whereas consumer loans or home mortgages immediately increase access to consumption goods, there is often a significant delay between the accrual and realization of benefits for student loans. The double-edged nature of debt as both barrier and facilitator to life transitions highlights the importance of looking at debt both as a monetary issue and also as a carrier of social meanings.

GENDER, DEBT, AND DROPPING OUT OF COLLEGE.

For many young Americans, access to credit has become critical to completing a college education and embarking on a successful career path. Young people increasingly face the trade-off of taking on debt to complete college or foregoing college and taking their chances in the labor market without a college degree. These trade-offs are gendered by differences in college preparation and support and by the different labor market opportunities women and men face that affect the value of a college degree and future difficulties they may face in repaying college debt. We examine these new realities by studying gender differences in the role of debt in the pivotal event of graduating from college using the 1997 cohort of the national longitudinal Survey of youth. In this article, we find that women and men both experience slowing and even diminishing probabilities of graduating when carrying high levels of debt, but that men drop out at lower levels of debt than do women. We conclude by theorizing that high levels of debt are one of the mechanisms that sort women and men into different positions in the social stratification system.