The Racialization of Financial Aid Policy

• In Event: Sociology of Education Section Roundtables
  In Refereed Roundtable (60 minute): Table 9. Higher Education Financial Policy

Abstract

In U.S. federal financial aid policy, student aid is awarded primarily based on income disadvantage, with wealth disadvantage playing only a small role. Simultaneously, Black-white wealth disparity is even starker than Black-white income disparity. Thus, by largely neglecting wealth-based financial need—disproportionately experienced by Black students—financial aid policy may be reproducing Black-white stratification in student debt and wealth generally. I conduct a systematic test of this proposition. Applying fuzzy regression discontinuity analysis, Kitagawa-Blinder-Oaxaca decomposition, path analysis, and descriptive statistics to two U.S. nationally representative data sources, I uncover evidence consistent with three notions: (1) the Black-white gap in student debt is explained more by family wealth inequality than family income inequality, (2) inattention to wealth in federal financial aid is a factor that helps explain the previous pattern, and (3) the previous two patterns help stratify wealth across generations later in the lifecourse. Based on this evidence, I advance a Racialization of Financial Aid Policy theory, which merges theoretical literature on racialized state policy with empirical literature on dwindling college affordability. This theory locates financial aid as a site where ostensibly race-neutral policies perpetuate racial wealth stratification.

Author

• Christian Michael Smith, University of Georgia