Session: Is Credit a Burden or a Lifeline for Vulnerable Populations? (Society for Social Work and Research 22nd Annual Conference - Achieving Equal Opportunity, Equity, and Justice)

Consumer debt plays a complicated role in the well-being of the household and the overall economic health of the country. Restricting access to credit can result in households being unable to finance necessary purchases and can limit a necessary financial lifeline households may rely on in emergencies. Thus, the role of debt with respect to the reducing extreme economic inequality and financial capability for all social work grand challenges is ambiguous.

As credit availability continues to grow and credit products increase in number and complexity, it is essential that social workers and researchers understand how credit operates in the lives of low-income or vulnerable populations and the risks imposed by credit usage. To help untangle the complex question of the relationship of consumer debt to household economic well-being, this panel presents three papers that offer an in-depth look at the ways vulnerable populations use credit and the implications for their well-being.

The first paper presents the results of a longitudinal qualitative study of low- and moderate-income women. By exploring the question of how these women use debt in their day-to-day lives, it reveals that these women are often trapped in a cycle of debt: Families used debt in attempts to become upwardly mobile or manage short-term problems, but eventually found themselves unable to pay off all their accumulated debt. From this analysis, the paper draws links between modern-day debt and the exploitative sharecropping system of the past.

The second paper then examines the relationship between consumer debt and financial well-being through a different approach. Using a longitudinal survey combined with administrative tax data on low- and moderate-income households, this paper investigates the link between varying levels of unsecured debt and the likelihood of experiencing material and health care hardships six months later.

The third paper uses the National Financial Capability Study to explore the relationship between taking on a specific type of short-term loan, the auto title loan, medical debt, and unmet medical needs. As one of the first studies to focus on title loans specifically, this paper suggests that relationships between high-risk debt like auto-title loans, medical expenses, and medical needs can be self-perpetuating, as people may take on high-cost debt to meet medical expenses but then avoid incurring future medical expenses by leaving health problems untreated.

Taken together, these papers present new ways of understanding the role of debt in households' financial security, as well as the complex interrelationship between debt, household behaviors, and overall economic well-being. As social workers become more involved in promoting financial capability in various fields of practice, they need a clearer understanding of how debt can act as either a protective or risk factor with respect to household economic well-being.