Young People See Debt As Empowering

Interesting in boosting your self-esteem? Perhaps you should consider borrowing such a tremendous amount of money that you’ll be repaying your loans well into old age. While having huge credit card and education debts isn’t generally viewed as a good thing, a recent study found that the more money people between the ages of 18 and 27 owe, the more empowered they feel. Yet, this usually starts to change once people approach 30.

Sociology researchers at Ohio State studied information on 3,079 people who participated in the National Longitudinal Survey of Youth 1979 – Young Adults sample, which is conducted every two years. They looked at how college loans and credit card debt related to the subjects’ self-esteem and feeling that they were in control of their life and could achieve their goals. Rachel Dwyer, assistant professor of sociology at Ohio State University, says:

“We thought educational debt might be seen as a positive because it is an investment in their future, while credit card debt could be viewed more negatively … 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.”

The biggest positive effect was among those in the bottom 25% of family income, who may benefit the most from being able to borrow money. Educational debt had no effect on middle class subjects, possibly because it’s so common, but those with the highest credit card debt had the biggest self-esteem boost. Debt had little effect on the richest subjects.

Today taking on debt is what enables many of us to reach our career goals and establish ourselves in life, and the study suggests young people see a benefit to investing in their education. However, owing money only provides a short-term positive effect. Those ages 28 to 34 felt worse about themselves if they had lots of debt. Younger subjects may have deferred their loans during grad school or assumed they would have no problem paying them off. Around 30 people are beginning to realize that they probably aren’t going to be offered a seven-figure salary, and will spend decades repaying the thousands of dollars hanging over their heads.