Race and the Educational Disparities in Midlife Bankruptcy Filings

Black Americans are overrepresented among bankruptcy filers, and those with bachelor’s degrees are underrepresented. Within the context of the complex relationship between race and education, I explore the educational roots of bankruptcy risk. Using data from the High School and Beyond (HS&B) study matched to 15 years of recent bankruptcy records (2003-2017), I ask if degree attainment and cognitive skills have independent relationships with the risk of filing for bankruptcy. I also assess whether those relationships differ by race and the extent to which those differences contribute to the high risk of filing for bankruptcy among Black Americans. While White Americans with bachelor’s degrees and higher cognitive skills are associated with a reduced risk of filing for bankruptcy, Black Americans are not. I estimate that the racial differences in the effects of educational achievement on the risk of bankruptcy contributes significantly to the Black-White bankruptcy gap.