Financial Aid

Does Student Loan Debt Make People Less Happy and Healthy?


People with student debt report worse health and greater financial stress long after they finish their degree, a new study from Gallup shows. The survey looked at 11,000 students who have graduated college since 1990 and found that people who took out more than $50,000 in loans rate their physical and financial status at least 10 points lower than their debt-free peers.

The findings offer a window into the deeply personal impact debt may have on students across the country, who are taking out more and larger loans than ever. Some research suggests that college is nonetheless worth its rising ticket price and that graduating doubles the hourly wages of workers.

It’s also true that the vast majority of students are not facing six-figure unpaid education bills. Eleven percent of Gallup respondents had $50,000 or more in debt, and broader data sets indicate that somewhere between 7 percent and 13 percent (PDF) of the almost 40 million student borrowers across the country have debts in that range.

But those facts and figures may be little comfort for people who are trying to build adult lives under the weight of debt. Gallup found that those who took out large student loans are suffering in ways that aren’t often captured in statistical surveys. These borrowers were less likely to say they had a sense of purpose in their lives, and less likely to report that they felt “motivated” to achieve their goals. They were also less likely to feel safe in their communities, or say they liked where they lived.

To jump to the conclusion that student loans ruin lives, however, would be an oversimplification. The study warned that it’s not necessarily the high debt that made this group less healthy or happy. Other things that make people take out loans, like their family’s wealth or the type of college they attend, “may be the same factors that influence graduates’ future well-being,” Gallup said. The study also doesn’t account for people who took out loans but left college without a degree, a group that’s about four times as likely to hold student debt today as in 1989, according to a Brookings Institution study (PDF).

“You can’t conclude from the Gallup data that student loan debt is having a negative impact on people’s health,” says Matthew Chingos, a Brookings researcher who co-authored a broad study on student loans released in June, adding that it’s “bad science” to assume college debt causes poor well-being later in life.

“It’s misleading, because people who have student loan debt years after college probably made less money. They may have faced all sorts of different challenges,” Chingos says.

Gallup did note that people reported low levels of financial and physical health “even after controlling for the highest level of education obtained by the respondent’s mother, a common proxy for socioeconomic status.”

There is some evidence to suggest that student debt may take a toll on major economic decisions, such as buying a home. Young people with student debt were once more likely to have mortgage debt, because more education led to higher incomes. But that changed in 2012, when the Federal Reserve Bank of New York reported that for the first time in a decade, 30-year-olds with student debt were less likely to buy a home than their debt-free peers.

“A lot of them are just going to be in this scary place all their life, where they don’t really become part of the economic grid,” says Daniel Austin, a professor at Northeastern University School of Law, in reference to people with high debt loads. “I don’t know that we ever produced a generation like that before in this country.”

Austin says the number of debtors with high bills is concerning even if it accounts for a small share of all borrowers. “For those who are trapped in the valleys where they have too much debt but not enough income, they’re going to be there in a way that I don’t think people 10 years ago were,” he says.

Some 5 million Americans have $50,000 or more in education debt, according to data from the New York Fed.

Kitroeff is a reporter for Bloomberg Businessweek in New York, covering business education.

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