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Debt and Loving It: Young People in Debt Are More Confident

Apparently debt is good for young people's egos. But is this a good thing?

Who knew that debt could massage your ego? A recent Ohio State study found that the more credit card and college loan debt 18 to 27-year-olds held, the higher their self-esteem and the more they felt they had control over their lives. The biggest boost in confidence benefited those in the bottom 25 percent in total family income.


Rachel Dwyer, the lead researcher on the study, says there should be a clear difference between feeling good about credit card debt and school debt. But apparently, there’s not. She explained:

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.

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Excuse me for being a Debbie downer, but this self-assurance worries me. A little well-strategized debt is fine, and I can understand not wanting to worry about debt when you’re an undergrad—your earning power almost doubles from high school to college graduation. But tons of credit card debt? This gain in confidence seems like a classic case of reveling in short-term material comfort before reality catches up. Sorta like retail therapy after a breakup. Or, I don’t know, the foreclosure crisis.

Not even the school debt explanation is airtight, though. I’m starting to hear weary comments from my over-30 friends that their Masters degrees in journalism or business or ethnomusicology are at best not worth the five-figure pricetag, at worst completely useless. With the oversaturation of students in grad school, that kind of debt is by no means a guaranteed investment.

Plus, a college education may falsely present a foolproof way out of poverty. Even though the poor and working class young people in the study enjoyed the biggest morale benefits from their debt, they’re going to have the most trouble paying it off. I remember reading Anya Kamenetz’s Generation Debt back in 2006—the year I graduated from college—and being scared shitless by the stories of poor kids with degrees, struggling to pay their $700 monthly loan payments.

Perhaps the most telling takeaway from the study is that people do start worrying about what they owe after the age of 28—when deferred loans kick in, babies start being born, and college futons are replaced with actual couches. As we adjust to the fact that our future is bleaker than our parents’, hopefully we’ll start to think twice about how much debt we choose to carry on our shoulders, or at least be able to assess how much we can handle.

photo (cc) by Flickr user Ghirigori Baumann

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