Structural policies have systematically impeded the accumulation of wealth among Black American families. Consequently, Black students are less likely to have family wealth to draw upon for college financing, resulting in higher rates of borrowing and larger debt loads which can stymy well-being and economic prosperity. With this grant, Smith will examine whether the federal Pell Grant formula’s emphasis on income over wealth exacerbates racial inequality in student aid and debt outcomes. Smith will conduct a variety of hypothesis tests, including decomposition and regression discontinuity methods, on national student data sets to explore the relationship between race and wealth under the current Pell system. Smith will also test whether a supplemental Wealth-Based Pell Grant for students with $0 in family wealth has the potential to narrow the Black-White gap in student borrowing. Smith’s work will advance our understanding of how a seemingly race-neutral policy may exacerbate racial inequality and build evidence for a more equitable, wealth-conscious alternative to reduce the gap in Black-White student debt and improve economic outcomes for Black students.
Does the emphasis of the current federal student aid system on income over wealth reinforce Black-White inequality in student borrowing and debt? Does a more wealth-conscious policy have the potential to narrow the racial gap in student borrowing?
