Bucks: College Students Don’t See Debt as Burden

Fred R. Conrad/The New York Times

Debt has become a way of life for American college students. The average student loan debt among graduating college seniors was more than $23,000 in 2008, according to FinAid.org. In addition, the student lender Sallie Mae says the average graduating senior with at least one credit card had $4,138 in debt on the card.

Yet, instead of feeling stressed about owing all that money, many students actually feel “empowered,” says a new study from Ohio State University, based on an data collected for the federal Bureau of Labor Statistics. The study, published in the journal Social Science Research, surveyed 3,079 students, the majority of whom were in their early- to mid-20s.

That’s right. The more college loans and credit card debt that young adults age 18 to 27 have, the higher their self esteem — and the more control they feel they have over their lives. They tend to view debt positively, rather than as a burden.

Come again?

Rachel Dwyer, an assistant professor of sociology at Ohio State and the study’s lead author, says it’s not entirely clear why debt seems to have that effect. But the finding is consistent with earlier research suggesting that student loans, in particular, represent the cost of opportunity for some students, and so can be seen in a positive light. “Educational debt can represent an investment in the future,” she said.

That seems to hold true for credit card debt, too. It may be because students use credit cards for educational purposes, she said. Some students, for instance, may use cards to buy books or even “that nice interview suit.”

“In spite of many cautionary signposts,” the study concluded, “young people appear to be more likely to see debt as an investment rather than a burden as they begin their transition to adulthood.”

There are signs, though, that the glow wears off as the students put more distance between themselves and their college days — perhaps because they are starting to make payments on the loans and may be beginning to realize that their salary doesn’t go as far as they may have thought. The oldest of those studied — ages 28 to 34 — began showing signs of stress about the money they owed.

“They’re experiencing the burden of repayment,” Professor Dwyer said, “versus the pleasure of going to college.”

Even if students are optimistic about their debt, there’s reason for caution, the authors said. Students may consider the easy availability of debt as a positive signal about their potential future earnings, “leading to circular reasoning in which the only guaranteed winner is the lender,” the authors said.

What do you think? Has the culture of student debt gone too far?

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