A new study shows that despite popular assumption, credit card debts and student loans do not make young adults anxious about their financial situation.
Instead, debt can actually boost self esteem and make young people feel more in control of their own lives.
The study, which was conducted by Sociology professor Rachel Dwyer at Ohio State University, showed that young adults aged 18 to 27 feel empowered by student loans and credit card debts.
For some, the greater the amount of debt, the better they feel. However, as people progress in life, settling into careers and homes the pressure begins to increase. Those in the age range of 28 to 34 felt more stressed about their debts, especially if they still had unpaid student loans hanging over them.
The study, publish in “Social Science Research” concluded that debt is a valuable resource for young consumers rather than a dangerous risk. The study concluded that both credit card debt and student loans can have a positive effect on a young adults self esteem.
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. The confidence boost that comes from debt is especially evident for young adults coming from middle and lower class family backgrounds. Lower class young adults found all types of debt to be empowering, while middle class young adults gained more confidence from credit card debt. Student loans appeared to have little effect, perhaps because they are so common for that particular demographic.
However, although student loans are a seemingly important way for students to gain access to a range of educational and employment opportunities, credit card spending can often lead to dangerous spending habits in the future. This is particularly true if young adults come to depend on them to boost their confidence and self esteem. It is important to consider the financial consequences of credit card borrowing. Rachel Dwyer said:
Debt can be a positive resource for young adults, but it comes with some significant dangers. Young people seem to view debt mostly in just positive terms rather than as a potential burden.
The study involved 3,079 young adults who participated in the National Longitudinal Survey of Youth 1979. The NLSY interviews the same group of Americans every two years in order to track changing attitudes towards various areas of life depending on age. The study focused on answers given in relation to student loans and credit cards.