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How Student Debt Affects Your Life After College: The Facts Are In

Aug 27, 2012 Jennifer Williamson, Distance Columnist | 0 Comments

As of late 2011, there was more outstanding student debt in America than credit card and auto loan debt.  Student debt continues to rise—with the average borrower  and while there have been studies on how grants and scholarships affect the lives of graduates, there have been very few empirical studies on the effect of student debt on the lives of borrowers after graduation. Until now.

A study from Clemson University, entitled Effects of College Educational Debt on Graduate School Attendnace and Early Career and Lifestyle Choices, was completed in 2010 and recently plublished in Education Economics. In it, researchers searched through financial aid data from over 7,000 people who graduated college in 1992 and 1993, studying their major life choices and decisions in the decade after.

According to the study, larger amounts of student debt make you: less likely to go to graduate school. The data showed that, for public college graduates, just $1,000 more in student debt could reduce the chances of attending graduate school within four or five years after graduation by 2.7%. It also reduces
your chances of attending a doctoral or professional
post-graduate school, such as medical or law school
or earning an MBA.

Woman and Stack of Bills

These days, it’s easy to find anecdotal evidence of graduates making tough life choices because of their goals.


The same is not true of private school graduates, however. According to the data, private school graduates with larger levels of debt are equally likely to attend most graduate schools—and they’re more likely to try to earn an MBA.

According to the study, debt levels were not found to have an effect on a graduate’s choice of profession, decision to marry, homeownership, or bearing children. However, it should be mentioned that this study focuses on data from the early 90’s—when the student debt landscape was much different than it is today.

In 1992-1993, only 5% of graduates carried more than $20,000 in student loan debt. As of late 2011, the average student loan burden was $23,330—with debt loads in the six figures not uncommon, especially for students who attend graduate school online.

These days, it’s easy to find anecdotal evidence of graduates making tough life choices because of their goals. Unfortunate graduates have been profiled in such high-profile publications as the New York Times and the Wall Street Journal. But there are few empirical studies detailing the effects of student debt on graduates’ life choices in more recent times.

However, there are clues. For instance, a more recent study by IHS Global Insight shows that student loan debt has been rising since 2007—even as other types of debt have been falling. At the same time, the age of marriage has been creeping up—rising from 27.5 for males and 25.6 for females at first marriage in 2007 to 28.7 and 26.5, respectively, in 2011. And fertility rates have been declining, too. In 2007, there were 69.3 births per 1,000 women aged 15-44. In 2011, there were just under 65.

So far, this data has not been conclusively linked to the student loan burden. The average age of marriage has been rising for decades. However, birth rates were going up until the recession hit—and it makes logical sense that those struggling with financial burdens that include student loan debt might postpone having children.

An empirical study of the effects of student loan debt on major decisions such as career choice, fertility, and homeownership would no doubt provide valuable information for lawmakers—as well as realistic information to students and their families about the possible effects of student debt.


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