Misconception of debt

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.

10 Responses

  1. Glenn

    Who is going to pay for all those grants so you can get your free education? Those “government” grants come from the taxpayers’ pockets. Why should we pay more so you can get a free ride? Get a job and pay for your own education.

  2. Shari Dinkins

    I agree with Emily. Having and using a credit card of one’s own does make a person feel powerful–and for some of us first-generation college students, powerful for the first time. I, too, got a credit card at 17 and was thrilled to have “money of my own.” Without family support of any kind (and only a few hundred bucks through my colleges’ financial aid), I ended up with several low-interest student loans. Over the years, I had a number of jobs… some which paid very little. And then I had a deadbeat husband who left me with a few thousand dollars of debt. You all know the story. Somehow I had $25,000 worth of debt with very little to show for it. At 48, I have now paid off ALL my debts (including my current 2-year old car). Believe me, it feels great!! Not owing anything to anyone is a great feeling. It’s even better than the short-lived pleasure of buying something (necessary or not) on a credit card with my own name on it. There were several times I thought of defaulting on loans or going bankrupt, but I held up my head, worked 2 jobs for decades, and paid what I owed. This is real American spirit. I recommend debt-free, responsible living to anyone! The sad news is that I think that many of our younger citizens will learn this lesson the difficult, struggling to survive way that I did. If they do, I hope they take the road I took and take care of their own debt rather than hoping someone else will.

  3. I was raised by grandparents who did not speak English. And we were very poor. I was a “negotiator child, ” the kid who negotiates on behalf of her family in social, finance, and business situations with the larger English-speaking world. I used to have to sign a register slip at the local corner store for the food we bought. I figured out as a young adult that we were getting credit. But grandpa and I always walked together to pay the store owners what we owed at the start of each month. At some point I figured out I would have to go to college–even if I had to borrow for my tuition. I worked 2 jobs while going to college, and still had to take out loans. I paid back all my education loans and it took me over 20 years. My grandma once told me we were poor, and that in order for poor people to do things or get somewhere, we’d have to borrow. She said “Thing is, honey… you have to pay it back. Take pride in that.” I did. And I still do.

  4. Joseph Montezello

    Several good points in Emilys blog! I don’t believe that the kids taking these college loans realize the significance of them or the responsibility that they are signing themselves up for in the future. But unfortunately a college education is not cheap, and most any student coming out of a four year college is going to have some loans. Like Emily, my children will be first generation college kids coming from a working class home. We have been concerned for some time now about financing their future. We are planning on using savings, scholarships (hopefully) and loans to pay for their education. Unfortunately, the “middle class” kind of get a screwing when it comes to financial aid offered by colleges or the government! We make too much money to get any aid or grants, but we don’t make enough to not have to worry about it. Hopefully, with the education my children will get, this won’t be as big a concern for my “future “grandchildren down the line. Good blog Emily..hopefully more students will read this and really think about it before signing on that dotted line..I’m not saying they shouldn’t sign, but just know what it all means!

  5. oh well

    I’m sorry but, debt makes you feel better? Your “working class” background does have an affect on how you feel about debt and it’s not the same reason’s as the rest of us non-working class people (because being middle class, which is what you are, now appearantly qualifies you as the only ones who work).

    The rest of us work too, even though we might not have middle class parents. The perception of debt as a concept isn’t what separates successful first generation college students from ones who default on a loan who then can’t go back to college.

    I’m not wasting any time or effort on this blog anymore to rationalize ignorance towards poverty as a misconception that can be bridged with understanding because arm chair psychology is being used to discard social science.

    The reason why your mom is more worried about your debt than you is because if it becomes too much for you to pay off because your education doesn’t pan out, you’ll be moving back in and that costs her money not you.Also, obviously, your mom cares very much about what is best for you too I’m sure but your acceptance of debt isn’t soley a matter of psychological conditioning; there’s more utilitarian reasons. Lower income students are constantly pressured into taking out loans that they will never be able to pay back. The reason for the lack of success lower income students encounter with student loans has more to do with factors outside of their control (no, not poor study habits, impulse control, time management or the usual scapegoat excuses used by misinformed middle or upper middle class people).

    The affectors are socioeconomic, not psychological. I’m not wasting time explaining the technology gap between lower income students and their peers, geographical isolationism, social marginalization, latent or “defacto” discrimination. You should have learned that by now in the one or more sociology classes that I hope were part of your prerequisites.

    All I’m pointing out, with as little long winded blatently obvious social science observations as possible that no one cares about or is just going to flat out deny, is hat this post however well meaning, has blaming the poor written all over it. If a poor person takes out a loan, who is already motivated to overcome the obstacles in their way being a low income first generation college student, then wouldn’t it make sense that they’re going to feel very motivated about paying it back? They have no choice but to feel positive about the loan, they have much less room for negative counter productive outlooks on life or low self esteem to begin with than middle class students. Doesn’t the age group of people who felt more negative about debt tell you something? Could it be possible, maybe even likely, that after age 25 many of the students who defaulted and couldn’t return to college or who had diminished economic viability because of the interuption in their academic progress because of the unsuccessful loan MIGHT FEEL A LITTLE LESS STRONGLY ABOUT GOING DEEPER INTO DEBT?

    Honestly, for all but people who have the familial safety net both socially and economically, who can afford to see debt as some abstractified concept that is a matter of perception or emotional reaction? Last I checked, as a self supporting adult who is a first generation high school and college student, debt actually is a quantity that neither collectors nor employers see as a matter of self esteem. When you have to plan for your future responsibly, you don’t let the eb and flow of self confidence or youthfull angst take a front seat to rational, realistic(not idealistic) reasoning. Nobody here has ever heard of middle class students being more likely to be able to pay off student loans or to get them in the first place, compared to low income students?

    I hope my post doesn’t sound like I’m somehow trying to discredit Emily personally, it’s more about the larger picture of the middle class misconception that poverty is the fault of the poor person entirely by making it seem like it’s just a matter of perception or attitude. I’m grateful that Emily has decided to intern with your organization and wish her much success. I’m just not understanding why on this post and many recent ones there seems to be more points of veiw from people that are from a stand point of middle or upper middle class and little or none from anyone pointing out the socioeceonomic differences that contribute greatly to the topics discussed as they affect people in poverty.

  6. Emily Loftis

    Glenn, while I agree that the money must come from somewhere, I also think the bigger issue is the cost of education. I could realistically attend college and work a job to pay for it at the same time. In order to hold a job while in college (one that even makes a dent in the cost of education), a student either can’t be full-time or can’t attend decent schools. By decent I mean, top-tier of any kind. I could have gone to community college in my hometown and come out of college with zero debt. I would have also gained a degree that didn’t even come close to the education that I receive at Wellesley. Although personally that would be devastating, that’s not my biggest concern here.

    The problem is that the way that education exists, both the cost and the lack of grants for those who need it, fills our top colleges with the richest from the country. I was always raised to believe that America was a meritocracy, and coming to college taught me that America is the opposite in relation to college education. The brightest kids don’t attend the best colleges, because the reality is that they can’t afford them. So what? Dumb rich kids get the best college education, why is that a problem? The problem is that the filling top colleges with the richest, and not the brightest, leads to top positions in government, finance, and basically any industry in the United States going to the kids that could afford 50K a year tuition. I know that the money in grants would come from taxpayers, but I honestly think it’s a worthy cause. Who wouldn’t want to fill important positions with the most intelligent, and best educated? The idea of telling millions of brilliant kids that they must attend community college or school part-time (which very few of any colleges in the top-tier allow) is creating an aristocracy in America and totally removing any idea of the American Dream. Instead of telling our children to work hard in high school and they’ll be rewarded, we’re telling them that they must also work their way through a minimum wage job to attend a school that they intellectually do not belong in. On an individual level the idea that one must be able to pay for the outrageous costs of education that they are fully capable and deserving of is upsetting, but the bigger picture completely destroys any idea of America as a meritocracy providing social mobility through education.

  7. Glenn

    So I should be happy to pay even more in taxes so you can have a free ride to your fancy education? Sorry, I don’t see it that way. It is simply not true that you need an Ivy League education to rise to the top in government and business. That education may make it easier to get to the first few rungs, but government, and particualrly business, is interested in results. If you’re as bright as you claim to be, you would have no difficulty shooting past those “dumb rich kids” you have such contempt for, even with an education I didn’t have to pay for.

    Your remarks, to me, exhibit the worst kind of entitlement mentaliity.

  8. Maynard Seider

    Re Glenn’s comments: The reality is that the top Wall St. firms recruit from the Ivy and Little Ivy. I taught at a state college in North Adams and they ignored my college to go next door to Williams. Supreme Court justices recruit clerks from the Ivies for the most part. The same for the presidential cabinets. (See Bill Domhoff’s “Who Rules America?”) It’s not a question of smarts; it’s a question of social connections and comfort. An upper class Ivy educated top executive at Morgan Stanley feels much more comfortable at the Ivy college he graduated from and connecting with someone from the same social background as he (and it’s most likely a “he.”) And, besides leaving out so many bright kids from non-elite colleges, this process also tends to perpetuate conservative ideologies. Witness the “best and the brightest” who brought us the Vietnam war and people like Larry Summers who helped bring us the financial mess we’re in now.

  9. Jane

    Can you please provide proof for the following allegations you make in your commentary?

    1. “The problem is that the filling top colleges with the richest, and not the brightest, leads to top positions in government, finance, and basically any industry in the United States going to the kids that could afford 50K a year tuition.”

    2. I enjoy the fact sheet you included from Demos. Can you please provide data regarding the rising cost of college tuition between 1996 and present-day? I believe that the numbers would directly explain the rise in the amounts of college-related debt.

    3. “The brightest kids don’t attend the best colleges, because the reality is that they can’t afford them.” How are you measuring “brightest” within your analysis? Is there a direct correlation between intelligence and income? If so, do you really believe, as you indicate in your work, that the people with higher levels of intelligence have lower amounts of financial ability?

    4. If students who need to take out loans, such as yourself, truly feel they are brighter than students who do not require external financial assistance, then why do you not believe you can pay back the debt through employment? If the ‘brightest’ students need aid to go to the ‘best’ schools shouldn’t they also statistically end up with the ‘best’ jobs and therefore the ‘best paid’ jobs? Can you please provide some data regarding students with outstanding loans and the proportion of their loan that they can repay based on their salary directly out of school?

    If you are going to write academically, you should use factual evidence to explain your assertions. With writing and unwarranted opinions like this, one wonders if you could have just followed in your parents’ foot steps and never gone to college or more ambitiously stuck with the community college, no debt plan and ended up in the same place you are right now…

  10. Emily Loftis
    Emily Loftis

    1. The book, the Price of Admission by Daniel Golden, provides information about all the top colleges and their admission practices. Specifically, the book confirms the fact that very few spots at these colleges are given to the smartest students. Logically, if top colleges are not filled with the brightest students – top jobs are also not.

    2. Academically, you know that data such as this takes time to collect and analyze. I wasn’t trying to assert that the self-esteem boost from debt is causing the rising debt, but only that it’s an extremely negative factor associated with the rising debt.

    3. You misunderstood my statements on this matter. I never said that intelligence has anything to do with financial ability. I simply state that the intelligence of a student doesn’t matter at a certain level because they can’t afford to go to college. I think it’s a problem that bright students often don’t attend the college that they would do the best at because they can’t afford it. I’m not saying that richer students are less intelligent, but that these students aren’t the best and the brightest that our country has to offer because those of lower incomes are weeded out.

    4. I never said that I feel that I am brighter than students who do not require aid. The problem with your theory is that students who are intelligent and in my opinion, deserve the spot in college, are either not given the chance and are denied acceptance – again refer to the Price of Admission – or are not able to take out the loan that would allow them to attend. Banks and lenders don’t really count intelligence and ability to gain a good job after college as collateral for a loan.

    If you’re going to tear apart an article it’s probably best to read carefully what the person is saying. Several of your points were false conclusions and leading questions. Also, I wasn’t attempting to write academically, but more to write persuasively. I believe strongly that our country is creating an elite ruling class, and I think that problem directly stems from inequality in education. As a college student, the college process in relation to debt and admissions is a very familiar topic. I took a personal experience, an interesting study, and my personal knowledge to create an article that addresses a topic that not many think about. As for your last comment, please don’t waste your time speculating about what decision I could have made with my life – there are far better things to be considered in the world.

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