This Article reports new data from the 2007 Consumer Bankruptcy Project revealing that college graduates and specifically White graduates are less likely to file for bankruptcy than their counterparts without a college degree. Although these observations suggest that a college degree helps graduates to weather the setbacks that sometimes lead to financial hardship as measured by bankruptcy, they also indicate that a college degree may not help everyone equally. African American college graduates are equally likely to file for bankruptcy as African Americans without a college degree. 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 observations draw attention to 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 educational debt practically impossible. Given preexisting wealth, educational loan borrowing, and post-graduate income data concerning African Americans, these data suggest that African Americans may experience Congress's restrictive educational loan discharge policy more acutely than Whites. Indeed, African Americans are more likely to borrow money for college, earn less after graduation, and yet are bound by the same duty to repay educational loans. Ultimately, these educational loan policies may reveal who, as a practical matter, should and who should not be going to college. More troubling is that this division seems to track socioeconomic and racial lines. 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.
Race, Educational Loans & Bankruptcy,
Mich. J. Race & L.
Available at: https://repository.law.umich.edu/mjrl/vol16/iss1/1