Like many college students, I recently took out my first loan for college. Although not a significant amount, it was still more than I’ve ever had in my own personal bank account. My loan was the first money I’ve ever borrowed; I don’t even own a credit card. Unlike my mother, who is already worried about paying it back, I’m not as concerned with repayment. It’s not that I’m irresponsible; I just think that by the time I have to make payments it won’t be that big of a deal. I had assumed that I was alone in this feeling until I stumbled across a study conducted at Ohio State University based on a survey indicating that the more debt individuals age 18 to 27 have, the more empowered they feel.
When looking at the survey, researchers at Ohio State focused on two things: “the subjects’ self-esteem and the feeling that they were in control of their life and could achieve their goals”. I think my first loan caused the same reaction that it did for the participants of the survey. I feel in control of my future, I feel mature and responsible. If taking out a loan causes positive responses in so many participants, including myself, what’s the problem?
The problem lies in whom the positive feelings impact: those in the bottom 25% of family income. Those with the least amount of income, and the least financial potential of repayment of debt, have the greatest short-term benefit of debt. There has been a great increase in college debt. A fact sheet by Demos reveals that college debt has been rising, having almost doubled since 1996. The average college debt accumulated over four years was $12,750 in 1996, and is now at almost $23,200 – far more than most can pay back, given what kind of jobs most recent college grads can get. So not only are students faced with the problem of accumulating twice the debt they would have twelve years ago, they are also gaining positive self-esteem from this debt.
Based on the survey, my working class background directly relates to the self-esteem boost and feelings of adulthood my loan creates. Something about the culture of the United States creates a feeling in the poor and working classes that educational loans and credit card debt are great routes to success.
Sadly, the survey also indicated that participants 28 to 34 felt worse about themselves if they had a lot of debt; the boosted self-esteem in the 20’s leads to an extreme fall in self-esteem in the late twenties to early thirties. The same force that creates the drive to go into debt and the subsequent short-term positive impact also creates harmful long-term effects, both psychological and financial.
More advocacy needs to be placed on dealing with the problem of rising debt. Government policy could put a halt to the increase in student loans. In the 1979-1980 school year, grants made up 55% of federal financial aid to undergrads, with loans making up 39%. In the 2007-2008 school year, grants only made up 26% of federal financial aid, with loans rising to 64%.
So where does this leave me? I still feel positively about my decision to take out a loan, but this new information will caution me in the future when I face the decision take out more loans. I want to look into encouraging the government to provide more grants and loans, as well as encouraging others to contact their local politicians to make their voices heard. I also want to look into adding restrictions on private lenders that end up exploiting a college students need for a loan rather than lending at a rate that individuals can reasonably repay.
Emily Loftis is First Generation College student at Wellesley College. A rising junior, Emily is from a small town in Ohio and a working class family. Emily is currently a First Generation College Student Organizing and Media, Blog, and Social Networking intern at Class Action. She is a Classical Civilizations major and Computer Science minor, with an interest in class equality. She is expecting her first nephew soon, and wants to make the world a better place for him.