Pushed into the Red? Female-headed Households and the Pre-crisis Credit Expansion

In the lead-up to the 2008 Financial Crisis, average household debt grew significantly. Some evidence suggests that female-headed households may have been disproportionally represented in this increase in indebtedness. This analysis uses Survey of Consumer Finance data from 1995 to 2013 to investigate whether female-headed households experienced greater growth in debt during the pre-crisis credit expansion relative to male-headed households and whether this debt persisted post-crisis. The results indicate that female-headed households account for most of the growth in mortgage debt among lower income households during the credit expansion. Younger female household heads exhibited greater growth in average educational debt than young male household heads prior to the crisis, and growth in educational debt post-crisis was larger for older female household heads. This rising indebtedness among lower income female-headed households was not accompanied by sustained wealth or income growth, leading to increases in leverage and financial fragility.