As borrowing costs climb and wages lag, Americans are reassessing whether any debt truly helps build a secure future. What once was framed as productive borrowing now feels riskier for large swaths of the population — and that shift matters because it reshapes who can use credit to get ahead.
Debt has threaded through human societies for millennia, but attitudes about it have swung dramatically. In some ancient legal systems, indebtedness carried severe punishments; in early American history, debtors could face jail. By the 20th century, installment credit and mortgages recast borrowing as a tool for access — a car, a home, an education — rather than a moral failing.
Why access, not just debt type, determines outcomes
Scholars say the crucial factor is who can borrow on fair terms. Princeton sociologist Frederick Wherry, who runs the Debt Collection Lab, points to a modern version of the “Matthew effect”: resources compound for those already advantaged while the vulnerable fall further behind. That dynamic means the same loan product can be liberating for one person and trapping for another.
Middle-income households feel the squeeze in a particular way. Wherry and others argue that low-income borrowers often qualify for targeted aid and legal protections, while wealthy families can obtain credit with favorable terms. The middle class, by contrast, frequently lands in the uncomfortable middle — exposed to higher-cost credit and fewer safety nets.
Philosophical roots: debt as moral and practical power
Long before modern credit markets, thinkers tied money to moral order. Graham Hubbs, a philosophy professor at the University of Idaho, notes that early Greek texts framed the ability to repay as central to justice. The broader takeaway: money’s power is less about consumption and more about clearing obligations and preserving freedom.
Today that perspective helps explain why rising mortgage and tuition costs feel uniquely fraught — when routine necessities require debt, the line between investment and burden blurs. Hubbs warns that as payments grow faster than earnings, loans once labeled productive become increasingly onerous.
How policy shaped unequal credit
Historic policy choices embedded long-lasting disparities. Louis Hyman, a historian at Johns Hopkins, describes how New Deal-era credit systems were largely designed for white, married men, with others shut out or steered toward expensive alternatives. The result: a two-tier credit market where better rates and protections clustered for some groups while others paid more or had no access at all.
That legacy continues to influence who benefits from “good” borrowing today.
Perception and anxiety around borrowing
Financial therapist Sonya Lutter of Texas Tech University observes that many people now avoid all debt because general uncertainty has spiked. Social comparison amplifies that fear: seeing others’ struggles on social media can make even manageable loans look dangerous.
Still, Lutter notes nuance — anxiety does not always equal incapacity. Some households could qualify for lower-cost borrowing but are deterred by perceived risk.
Culture, religion and creditworthiness
Religious and legal traditions also shaped credit norms. Devin Singh, a religion professor at Dartmouth, traces how theological judgments about trust and belief bled into ideas of who deserved favorable lending. Terms related to credit carry roots in trust language — a reminder that judgments about borrowers have not always been purely economic.
Power and perception, Singh says, help explain why certain groups historically secured better access to what became known as productive debt.
- What’s commonly called “good debt”: mortgages and student loans intended to increase future earning power or build equity — but only if interest, repayment terms and income growth align.
- When it becomes “bad”: when borrowing costs rise faster than wages, when protections are weak, or when higher-risk lenders target financially stressed households.
- Who is most exposed: middle-income families who lack deep protections yet don’t qualify for targeted relief or the lowest-cost credit.
What this means now
For readers, the takeaway is practical. Rising interest rates, housing shortages and elevated college costs make it harder to treat borrowing as an unambiguous path to stability. Policymakers and lenders determine much of the outcome: who gets access, at what price, and with what consumer protections. For individuals, the implications affect homeownership prospects, student-debt choices and day-to-day financial stress.
Experts recommend paying attention to loan terms, expected income trajectories and available protections — and to treat labels like “good” or “bad” debt as contingent, not fixed.
Debt’s story is not only economic but social and moral: the capacity to borrow cheaply has widened opportunity for some while excluding others. Whether that gap narrows will shape households’ ability to translate credit into real economic mobility in the years ahead.
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Jordan Keller specializes in analyzing the US financial markets. With concrete recommendations, he helps you secure and boost your investments by providing strategies that adapt to market fluctuations.