Student Debt Linked to Worse Health and Less Wealth

Those with over $50,000 in debt have lower well-being than debt-free peers

by Andrew Dugan and Stephanie Kafka

As college costs rise and enrollment increases, the amount of outstanding undergraduate student debt in the U.S. continues to climb. The amount of student debt now stands at over $1 trillion for both undergraduate and graduate loans and exceeds Americans’ overall credit card debt, according to the Federal Reserve. In particular, estimates put the average amount of undergraduate student loan debt for the class of 2014 at just over $33,000, a substantial increase from $18,600 in 2004. . .

As the amount of money students are borrowing continues to grow, the importance of student debt as a U.S. political issue has increased. Politicians and higher education leaders express concern that highly indebted graduates are unable to forge an economic identity after graduation, putting off major purchases and suffering from low savings. . .

The findings from the Gallup-Purdue Index raise another important concern about student debt: its link to lower well-being. . .

Link Between Student Debt and Lower Well-Being Holds Across Graduation Classes

Relatively recent college graduates — those who earned their degree from 2000 to 2014 — who have more than $50,000 in student debt are significantly less likely to be thriving financially and physically than their counterparts without loans. They are also less likely to have a strong sense of purpose and to be thriving in their community well-being. Notably, for 2000-2014 graduates, the most indebted degree holders are less likely to be thriving in social well-being…

But older graduates who took out large student loans also differ from their fellow graduates in their current well-being. Though their student debt is likely paid off, those who graduated in the 1990s and borrowed more than $50,000 have lower financial, physical, and purpose well-being compared with those who never took out loans.

In financial well-being, older graduates that had large student loans trail behind their debt-free peers by 13 points in terms of thriving rates, nearly as large as the gap among the two of graduate types for the 2000-2014 cohort. . . .

Read the entire report at http://www.gallup.com/poll/174317/student-debt-linked-worse-health-less-wealth.aspx

Phil Izzo, “Congratulations to the Class of 2014, the Most Indebted Ever,” The WSJ, May 16, 2014

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