Many young adults actually feel empowered by their credit card and education debts, according to a new nationwide study

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    Jun 09, 2011 1:34 AM GMT
    http://www.eurekalert.org/pub_releases/2011-06/osu-wmw060611.php

    What, me worry? Young adults get self-esteem boost from debt

    COLUMBUS, Ohio – Instead of feeling stressed by the money they owe, many young adults actually feel empowered by their credit card and education debts, according to a new nationwide study.

    Researchers found that the more credit card and college loan debt held by young adults aged 18 to 27, the higher their self-esteem and the more they felt like they were in control of their lives. The effect was strongest among those in the lowest economic class.

    Only the oldest of those studied – those aged 28 to 34 – began showing signs of stress about the money they owed.

    "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.

    But the results offer some worrying signs about how many young people view debt, she added.

    "Debt can be a positive resource for young adults, but it comes with some significant dangers," Dwyer said.

    "Young people seem to view debt mostly in just positive terms rather than as a potential burden."

    Dwyer conducted the study with Randy Hodson, professor of sociology at Ohio State, and Laura McCloud, an Ohio State graduate now at Pacific Lutheran University.

    The findings appear in a recent issue of the journal Social Science Research.

    The study involved 3,079 young adults who participated in the National Longitudinal Survey of Youth 1979 – Young Adults sample. The NLSY interviews the same nationally representative group of Americans every two years. It is conducted by Ohio State's Center for Human Resource Research on behalf of the U.S. Bureau of Labor Statistics.

    For this study, the researchers examined data on two types of debt: loans taken out to pay for college, and total credit-card debt. They looked at how both forms of debt were related to people's self-esteem and sense of mastery – their belief that they were in control of their life, and that they had the ability to achieve their goals.

    Researchers have had two competing views of how debt might affect people's self-concept, Dwyer said. Some have said debt should have positive effects because it helps people invest in their future. Others have said credit should have negative effects because it allows people to spend more money than they make, thereby risking their future.
  • creature

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    Jun 09, 2011 1:38 AM GMT
    Two threads without your own words. Looks spammy to me.
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    Jun 09, 2011 1:43 AM GMT
    creature saidTwo threads without your own words. Looks spammy to me.


    This one speaks for itself. It's more of a PSA. I realize that you're pretty partisan about most issues but perhaps you can try reading it. I usually comment on mine.

    Parenthetically, Washington wants to make it more difficult for students and the young to borrow.
  • Greygull

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    Jun 09, 2011 1:48 AM GMT
    as someone who came out of college with 80k in debt, who makes 36k a year and is not only 29,000 in debt I don't understand why you'd feel empowered by a 400/mo bill every month
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    Jun 09, 2011 1:52 AM GMT
    Greygull saidas someone who came out of college with 80k in debt, who makes 36k a year and is not only 29,000 in debt I don't understand why you'd feel empowered by a 400/mo bill every month


    I think their point was more that it enables. From the study author: "Debt can be a good thing for young people – it can help them achieve goals that they couldn't otherwise, like a college education."

    Which sort of makes sense - do you think you'd be better off without the college education? On the other hand, there is a growing movement and criticism of the cost of education and some who argue it is NOT worth the cost - or starting not to be...

    But on that point, I think we are about to witness a wholesale transformation of the education industry over the next decade that rewards knowledge and experience and not time served.
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    Jun 09, 2011 2:11 AM GMT
    Between forbearance, loan consolidation, income-based repayment plans, loan forgiveness for public service and making x number of payments on time, student loans could possibly be the best investment one makes. Throw in extremely low fixed interest rates and the possibility of inflation during the next ten years, and it looks even better.

    Depending on your future income potential, it is very unlikely many people will ever pay off their student loans. I know some very educated (but not always the most practical) people in very low-paying professions who have the attitude that after a certain point, you might as well continue in school and borrowing massive sums of money because the likelihood of ever making all scheduled loan payments is zero.

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    Jun 09, 2011 2:19 AM GMT
    ILmarathonrunner saidBetween forbearance, loan consolidation, income-based repayment plans, loan forgiveness for public service and making x number of payments on time, student loans could possibly be the best investment one makes. Throw in extremely low fixed interest rates and the possibility of inflation during the next ten years, and it looks even better.

    Depending on your future income potential, it is very unlikely many people will ever pay off their student loans. I know some very educated (but not always the most practical) people in very low-paying professions who have the attitude that after a certain point, you might as well continue in school and borrowing massive sums of money because the likelihood of ever making all scheduled loan payments is zero.



    With respect to education though, I think the criticisms with respect to borrowing is that they can achieve the same or substantially better value elsewhere - especially relative to the value they get out of their educations. The liberal arts being a prime example of this.
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    Jun 09, 2011 2:21 AM GMT
    Oddly enough I've heard the exact opposite. http://marketplace.publicradio.org/display/web/2011/05/27/mm-generation-y-is-more-financially-responsible-than-you-think/

    Not gonna lie, I'm a bit bias to APM icon_smile.gif
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    Jun 09, 2011 2:27 AM GMT
    Hatter saidOddly enough I've heard the exact opposite. http://marketplace.publicradio.org/display/web/2011/05/27/mm-generation-y-is-more-financially-responsible-than-you-think/

    Not gonna lie, I'm a bit bias to APM icon_smile.gif


    I don't think that the two studies are actually inconsistent. Check out one of the author's articles that you link to - http://money.usnews.com/money/blogs/alpha-consumer/2011/05/11/class-of-2011-more-debt-than-ever

    The idea being that students are seeing it more as a cost benefit decision consciously going into debt for the benefit after the fact.
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    Jun 09, 2011 2:29 AM GMT
    riddler78 said
    ILmarathonrunner said



    With respect to education though, I think the criticisms with respect to borrowing is that they can achieve the same or substantially better value elsewhere - especially relative to the value they get out of their educations. The liberal arts being a prime example of this.


    I couldn't agree more. People I know who have extremely large student loan debts (150k+) generally amassed 80-100k on liberal arts degrees that offer no job prospects. Graduate school is dangled over your head as a way to easily borrow even more money, postpone loan repayment, and rack up student loans to the stratosphere.
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    Jun 09, 2011 2:41 AM GMT
    Eduaction loans are a hard call for me. I did not borrow anything for my undergrad degree and I'm looking to not borrow anything for my next. With this said, my desire to not be in debt may also be what is holding me back from my future success. Where is the balance?
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    Jun 09, 2011 3:00 AM GMT
    "Empowered by debt"?

    Ahh youth...they'll learn icon_wink.gif
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    Jun 09, 2011 3:02 AM GMT
    Fortunately, I'm making it through undergrad debt free but I can't imagine feeling "empowered" because I owe a large sum of money.
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    Jun 09, 2011 3:04 AM GMT
    with the government backed income-based repayment plan, why would anyone worry?

    the amount you pay back is capped at 10% of your disposable income for 25 years; after that, it's completely discharged (albeit as taxable income).
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    Jun 09, 2011 3:36 AM GMT
    EXACTLY! because nothing makes you feel more independent than having to live at home in your parents' basement while paying off the exorbitant debts you racked up ordering pizza and staying that extra year!