Buried in Debt? How Student Loans are Affecting Young Adults

By Carol Church, Writer, Family Album
Reviewed by Michael Gutter, PhD, Department of Family, Youth, and Community Sciences, University of Florida

Are you worried about affording your child’s college education? If you’re like most parents I know, the answer to that question is, “Are you kidding?” The price of higher education has increased by a staggering 250% over the last 30 years. In the face of such high costs, many students find it necessary to take on student loans. By 2011, a full 40% of Americans under 30 held at least some student loan debt.

The Costs of Borrowing

But this increasingly common burden has begun to worry many. Government research finds that student loans are pushing down home ownership rates among college graduates. Average credit scores among student loan holders have also gone down, probably due to the increasing number of debt holders who are delinquent in their payments. And for women, carrying a higher student loan balance is linked to delaying marriage.

What about the psychological well-being of all those student debt-holders out there? Are they depressed or bothered by the money that they owe? One paper looking at young adults in their early 20s found that this wasn’t as true as we might think. In fact, student debt was associated with higher self-esteem and more feelings of pride in one’s accomplishments.

Debt Catches Up

But there was a catch. These feelings started to dissipate when people hit around age 28. At this point, they may have realized that their debt was more of burden than they’d bargained for. This study also found that people from wealthier backgrounds had fewer positive feelings about their debt than those who’d come from poorer families. This might be because the positives of having attended college outweigh the negatives of debt for those from poorer backgrounds. But for students from higher-income families, this psychological boost may be smaller or nonexistent.

The Link to Mental Health

Now a new paper has been published looking at thousands of somewhat older student debtholders—those between the ages of 25 and 31. And at this age, debt did prove to be a downer. Those with more debt reported feeling more nervous, blue, and down in the dumps than those carrying less. This was true even after taking various other factors into account, like income, occupation, and whether degrees were completed. It’s interesting to note that once again, students who came from poorer backgrounds were less bothered by their student loans.

As education costs continue to soar upwards, millions of people nationwide will incur student loan debt and be affected by it for years to come. Although a college diploma is still an excellent investment, there’s no question that these financial obligations are having a noticeable effect on the lives of many. Families should do careful research and consider the costs and benefits of the different methods of paying for college. For some, there may be options available to reduce debt burden, such as income-based repayment and forgiveness for those working in government and nonprofits. For more, see the resources in Further Reading.

Further Reading

Federal Student Aid

Income Based Repayment: Everything You Need to Know

Public Service Loan Forgiveness

Student Loans: Choosing the Loan That’s Right for You

FTC: Student Loans

Photo Credits: Suprijono Suharjoto/iStock/Thinkstock


Brown, M., Haughwout, A., Lee, D., Scally, J., & Klauww, v. d. W. (2014). Measuring student debt and its performance. Retrieved from http://www.newyorkfed.org/research/staff_reports/sr668.pdf

Bozick, R., & Estacion, A. (2014). Do student loans delay marriage? Debt repayment and family formation in young adulthood. Demographic Research, 30 (69), 1865-1891.

Dwyer, R. E., McCloud, L., & Hodson, R. (2011). Youth debt, mastery, and self-esteem: Class-stratified effects of indebtedness on self-concept. Social Science Research, 40, 727-741. doi: 10.1016/j.ssresearch.2011.02.001

Mezza, A., Sommer, K., & Sherlund, S. (2014). Student loans and home ownership trends. Retrieved from http://www.federalreserve.gov/econresdata/notes/feds-notes/2014/student-loans-and-homeownership-trends-20141015.html


Posted: February 2, 2015

Category: Money Matters, Relationships & Family, Work & Life
Tags: Education Planning, Family Resource Management, Personal And Family Finances

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