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The purpose of this study was to examine racial/ethnic differences in AFS use and their contributing factors using a decomposition analysis.

The 2018 National Financial Capability Study dataset was used to analyze the four major types of AFS—title loans, payday loans, pawnshops, and rent-to-own (RTO) stores—as proxies for AFS use. The study conducted both logistic regression analysis and decomposition analysis to examine the contributing factors.

The results of the logistic regression analysis demonstrated significant disparities in the use of alternative financial services (AFS) among racial and ethnic groups. Specifically, it was found that Blacks were more likely to utilize title and payday loans, pawnshops, and rent-to-own (RTO) stores compared to Whites. In contrast, Hispanics and Asians/individuals of other ethnicities were less likely to use title loans, but Hispanics were more likely to opt for payday loans over Whites. Furthermore, objective financial literacy exhibited a negative association with the likelihood of using these four types of AFS, whereas subjective financial literacy consistently showed a positive association. When examining the decomposition analyses, it became evident that both objective and subjective financial literacy played significant roles in explaining the racial and ethnic disparities in AFS usage. However, the patterns varied in three specific pairwise comparisons.

This study revealed the relative contributions of each factor to the racial/ethnic disparities through decomposition analysis. Our Fairlie decomposition approach addressed non-linearities within the decomposition framework, particularly in estimating the probabilities of AFS utilization, given its binary outcomes. This extension builds upon the Oaxaca decomposition. The study offers valuable insights into the variations in AFS use among different racial and ethnic groups.

The COVID-19 pandemic presented unprecedented challenges, particularly intensifying the financial and psychological burden for individuals with student loans in the United States. Firstly, this study examined the association between student loan ownership and financial well-being during the pandemic. Secondly, among student loan holders, we tested the association of financial anxiety and payment delinquency with COVID-19 shocks and financial knowledge. Lastly, we investigated the associations between the recipients of student loans and their financial well-being, anxiety and behaviors concerning student loans.

Utilizing data from the 2021 National Financial Capability Study, we explored how unprecedented economic disruptions have affected student loan holders' financial well-being, levels of debt anxiety and payment delinquency, considering financial knowledge as a critical factor. We conducted Ordinary Least Squares (OLS) and logistic regressions to examine the associations addressed in the purpose of the study.

The results of regression analyses indicate that individuals with student loans generally experienced lower financial well-being than those without loans. Among student loan holders, COVID-19 shocks were positively associated with student loan anxiety and payment delinquency. Additionally, subjective financial knowledge showed a positive association, while objective financial knowledge displayed a negative association with loan delinquency. Lastly, respondents who secured loans for themselves exhibited lower levels of financial well-being than other student loan holders.

This study represents one of the initial efforts to investigate the issues of financial well-being, debt anxiety and payment delinquency among student loan holders, along with their associations with the potential COVID-19 shocks they experienced. The research shed light on the acute financial stress and mental health challenges faced by student loan holders during global crises, highlighting the significance of effective policy development for student debt management and borrower support during times of economic uncertainty.