Financed Mobility

The democratization of credit introduced consumer loans, particularly in the form of credit cards, to an increasing number of American households. Despite the salience of this financial resource, stratification researchers have yet to explore whether or not households use consumer credit as a financial resource to aid their children’s status attainment. The prevailing assumption about consumer credit is that it is a liability that subtracts from a household’s ability to accumulate resources. In this dissertation, I instead conceptualize consumer debt as a valuable financial resource that allows parents an additional means of investment in their young adult children. Because I expect resources to create cumulative advantage, I measure parents’ consumer credit use over a 30-year span to understand how their histories of indebtedness influence their ability to invest in their children during young adulthood. I argue that parents’ consumer credit use allows parents provide financial support for their young adult children which extends their adolescence and protects them from financial hardship during early adulthood. During this extended adolescence, young adults whose parents use consumer debt, I argue, will be more likely to pursue a college education and graduate with a Bachelor’s degree. I find that parents’ consumer debt meaningfully influences their young adult children similar to my expectations. When parents use consumer debt over time, they are more likely to financially provide for their young adult children. The advantages their children see from this financial investment also makes them more likely to enroll in college and graduate with a Bachelor’s degree. Moreover, when parents have a history of not carrying consumer debt over time or historically carry low balances, I find their children are significantly less likely to receive help with educational expenses, are less likely to enroll in or graduate from college, and are more likely to experience financial hardships during young adulthood. I additionally find that parents’ consumer credit histories influence the debt behaviors of their young adult children. I find that young adults whose parents have histories of low consumer debt are less likely to have education or consumer debt and carry less consumer debt when they do have loans. These young adults also have histories of carrying lower balances throughout their early adulthood. Young adults with high debt parents, on the other hand, are more likely then their peers whose parents have different debt experiences to carry education and consumer loans; they also carry higher balances on both forms of debt. I also find that young adults with high-debt parents are more likely than their peers to have histories of carrying high consumer loans during young adulthood. My findings suggest that parents’ consumer debt use benefits their young adult children by using debt to extend their adolescence, making it more likely that their children enroll in and graduate from college. However, by normalizing debt use, parents who carry high consumer balances over time also raise young adult children that are increasingly likely to become debtors themselves. Therefore, while the advantages of parents’ debt to young adults during early adulthood seem undeniable, the later impact of having to pay these debts may jeopardize young adults’ early status attainment.