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by Vault Education Editors | June 16, 2011


A new study shows that when young people take on debt, they feel good and strong, like they can take on the world. The more debt 18-27 year olds take on, the higher their self-esteem. Empowerment through debt—terrifying stuff.  

Debt can be a good thing for young people—it can help them achieve goals that they couldn’t otherwise, like a college education, said Rachel Dwyer, lead author of the study and assistant professor of sociology at Ohio State University.

Surely, though, a difference must be made between debt accrued on credit cards and debt amassed from student loans, right? That’s exactly what Dwyer and her colleague and co-author Randy Hodson thought at first. Educational debt good (investment in the future); credit card debt baaaad (encourages spending outside one’s means). That’s not how it works, it turns out.

Surprisingly, though, we found that both kinds of debt had positive effects for young people.  It didn’t matter the type of debt, it increased their self-esteem and sense of mastery.

Not only that, the poorer the person, the bigger the self-esteem boost. The wealthy, with all their money and resources, were unaffected by debt, and the middle class, so used to taking on student loans only got a kick from credit card debt.

Also, the younger the person, the bigger the boost. Only around the age of 28 did the study’s subjects start to feel the weight of their debt. Which makes sense, the world not being as easy or life not as straight a shot as it seems when we’re young.

If you are still in your early-to-mid twenties, already bedebted, come from impoverished means and are considering taking on more debt, take a moment to think. You may feel like a god right now, but gods don’t have debt. And there’s a shelf-life to the feeling good—about the time you start to feel like a real adult. Spend a few years seeing a large chunk of your paycheck go toward school loans every month and see how quickly that self-esteem falls. In the meantime, consider the fact that true self-esteem doesn’t come from the size of your loans. Your debt doesn’t define you.   

[OSU Research News, via NYT]

[Photo: Flickr/dospaz]


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Filed Under: Education|Grad School