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Young adults feel empowered by debt

Carrying a lot of credit card and student loan debt sadly raises the self-esteem of young people. The glow fades at age 28.

By MSN Money Partner Jun 8, 2011 11:09AM

This post comes from Jeanine Skowronski at partner site MainStreet.


A new study set to be published in Social Science Research found that young adults age 18 to 27 actually feel empowered by their credit card and student loan debt.


Researchers at Ohio State University analyzed responses from 3,079 young adults age 18 to 34 nationwide as part of a biannual youth survey conducted by Ohio State's Center for Human Resource Research. The study found that the more debt these young respondents carried, the higher their self-esteem became and the more they felt in control of their lives.


The results of the survey weren't completely unexpected. The researchers had assumed that student loan debt would have a positive connotation since young people tend to associate getting an education with bettering themselves.


"Young people seem to view debt mostly in just positive terms rather than as a potential burden," Rachel Dwyer, lead author of the study and assistant professor of sociology at Ohio State University, said in a press release. "Debt can be a good thing for young people -- it can help them achieve goals that they couldn't otherwise, like a college education."


But she admitted the enthusiasm for credit card debt was a surprise.


"We thought educational debt might be seen as a positive because it is an investment in their future, while credit card debt could be viewed more negatively," she said. "Surprisingly, though, we found that both kinds of debt had positive effects for young people. It didn't matter the type of debt, it increased their self-esteem and sense of mastery."


A debt 'high'

Researchers offered several explanations for the credit card feel-good phenomenon, such as educational expenses like textbooks or other school costs that would carry the same connotations of bettering oneself as a student loan. Post continues after video.

The researchers also explained that these young adults might be enjoying their debt because it has allowed them to buy the things they wanted without having to wait, though the data did not support this.


Still, the researchers were torn over whether the study's results have negative implications for America's youth.


"Debt may make young people feel better about themselves in the short-term, but that doesn't mean it won't have negative consequences in the long-term," Dwyer said. "We found that the positive effects may wear off over time, but they still have to pay the bills. The question is whether they will be able to. There needs to be additional research to answer this question."


The study certainly found that some participants riding a debt "high" were not in any position to pay it off.


Those in the lower classes felt the largest self-esteem bump from their credit card and/or student loan debt, while middle-class young adults felt no different with their student loan debt, seeing it as such a commonality among their peers that it's almost considered normal. This group did feel better about their credit card debt, however.


Young adults from affluent families felt no different with any kind of debt.


Then comes the stress

"The groups that most need the debt -- the middle and lower classes -- get the most benefits to their self-concept, but may also face the greatest difficulties in paying off what they owe," Dwyer added. (Do you have too much debt? Try MSN Money's debt calculator.)


The positive feelings toward debt may not last long, the study found, as those aged 28 to 34 displayed more stress about the money they owe.


"By age 28, they may be realizing that they overestimated how much money they were going to earn in their jobs," Dwyer said. "When they took out the loans, they may have thought they would pay off their debts easily, and it is turning out that it is not as easy as they had hoped."


More on MainStreet and MSN Money:

Jun 9, 2011 9:04AM
As someone who is that age, I feel enslaved by debt: not encouraged by it.

This just goes to show how schools are perpetuating stupidity.   Dummying down the American youth will allow the Gov't to put more controls on people.    To think debt is good has got to be the dumbest thing I have ever heard.

One doesn't need more research to know the effects on our citizens.   They just need to think about the rule of 72 and start crying.

Jun 8, 2011 5:48PM
This is the dumbest thing I have read today.  How is being in debt a good thing?  Basic finance needs to be taught in schools starting as early as possible.  The problem in this stupid country is everybody thinks they are entitled to everything.  My favorite sentence from the article is: "The researchers also explained that these young adults might be enjoying their debt because it has allowed them to buy the things they wanted without having to wait."  Clearly their parents are also morons and never explained that just because you want something doesn't mean you need it now.

How about this, pass legislation getting rid of credit cards and make loans available for houses and cars ONLY with strict restrictions!  That way this stupid country would only buy what it could afford, but common sense will never prevail in a country where more people vote on american idol that vote in an election.  Idiots.
Jun 9, 2011 10:00AM

Well I don't know who these test subject were that Ohio State found or dug up this survey group but this is certainly not the case with college graduates I have spoken with.  The half dozen or so I have spoken with feel they have been misled by promises of grandeur that a college degree or higher would provide them. They have merely found themselves strapped with mountains of federal debt and then to leave college and not find employment in their new found area of expertise.  I had a biology major wait on me at Longhorn Steakhouse 3 weeks ago and last night a young lady who had finished her state boards with a Master's in Architecture has been unemployed and now owes over $175,000.00 to the good ole US taxpayer because of false promises she was sucked in to.  I asked her where she has looked for employment and her response, four different states!  She said she no longer listens to the commercials that tout  bull  that "Your future is what you make of it".  She cried. 


 I felt like a heal and didn't have the heart to tell her that I too have been unemployed now for about 3 years and at age 52 have pretty well resigned myself to the notion that this is the way of the future.  I only have a BS in management. In my day that was enough to get you in and protected.  Today it is equal to a GED or less.  The world and especially America sells a distorted story of what a young person can and should expect out of life and hard work.  These "be all you can be", commercials funded by the government and so-called higher educational venues are as misleading as any weight loss infomercial.  Even our own military personnel that have been showered with special and upgraded benefits, from my time in service, will too begin to experience the perils of a tightening US military budget soon.  Word of warning to them, if you are spending every dime of each paycheck on tattoos and motorcycles and fun, you'd better pay attention to what is going on around you and start paying down debt and start saving your money.  In the 1970's and 80's people in the military were being forced out with early retirement after only 16 years and so on.  This will soon happen once again once America realizes that the threat of the outsiders is nominal and can be managed with a smaller fighting force and more technical than human assets.  You have been warned!   

Jun 9, 2011 12:46PM

I'm a 26 year old with 20K in student loans and I want to know who these people who feel empowered by their debt are, so I can go smack them over the head with a rolled up newspaper. I HATE having debt, it's like having an 800 pound gorilla following you around and looking over your shoulder. Credit card debt is even worse! I had to rack up a little bit of it because I had a lower paying part time job inbetween full time jobs last winter. I got a better job and now I can pay it off, but it still makes me really nervous to have it because my parents had money management issues, and I know what kind of mayhem it can wreak.


A couple of thoughts about the other comments here:

1.) All of the "kids these days" comments are completely absurd. After all, it was the previous generations that raised us. I've had very little, if any, required classes about personal finance my entire educational career, and the college exploration classes they have you take are just there to railroad you into going into college so you can pay them money. We can't be the paragons of personal responsibility that you claim to be right out of high school when we haven't been given the tools to do it.

2.) Stop trying to spin this politically. "These kids must be liberals, they spend money they don't have HAR HAR HAR!" The issue here is that people our age are getting shoddy education about money management, and credit card and student loan companies are right there to take advantage of it. That affects EVERYONE.

Jun 8, 2011 11:37PM

I don't think young people enjoy debt because of what it can buy, but because it's an "adult" thing to have.  It makes them feel grown up, like their parents.  It's the same reason youngsters start smoking, drinking, or drugs; it makes them feel important, cool, strong.


What can I say?  Everyone over 30 knows kids are morons.

Jun 9, 2011 8:20AM

People who try to live beyond their means end up living beneath their means.  If you borrow to buy "stuff", the interest you pay is money that you don't have to buy other "stuff".  Before many years, you have paid enough interest to have bought all the "stuff" you bought before you could afford it.


You'll then be behind for all the rest of your life.  Sounds pretty stupid here.

Jun 9, 2011 10:45AM

I actually just made a hotmail account so that I can respond to this article. This is the most ridiculous, infuriating thing I've heard in awhile. I graduated with my Bachelors degree in May of 2009 and STILL have not found a full-time, permanent "professional" job. And trust me, it is not from lack of trying. I have supported myself since I was 16, pay for every single one of my own bills, including my +30k in student loans. The fact that I was told my entire life to go to college to better myself, make a better life for myself, and have access to a great career choices... when in reality all I got was a load of debt and stressful calls from creditors really, reallllyyyyy makes me angry.


And every single one of my friends is going through the same thing. Boy, do I feel empowered.

Jun 9, 2011 12:33PM
I'm not sure what kind of students they interviewed for this ridiculous article, but I fall right into the same age category and I hate that I have student loan debt. It doesn't make me feel better about myself at all. It only stresses me out as I struggle to pay off my student loans.

This is totally absurd. These "students" need to get back into the classroom and actually learn that debt is NOT a good thing. America is too comfortable with debt; it is unfortunately the norm, and that is NOT a good thing.

Jun 9, 2011 11:02AM
I'm in the age group written about in this article and I for one do NOT feel "empowered" by any kind of debt, be it from credit cards or student loans. Having debt means you owe someone or something and will be beholden to them until it is payed off one way or another. This is the first time I've read about a group of people who derive feelings of empowerment and high self-esteem from the fact that they are essentially slaves. How anyone would feel this way about their debt is beyond my comprehension.
Jun 9, 2011 10:50AM
I don't know who these people interviewed! I'm 26 and I hated my debt while I was still in school, I had horrible anxiety about it and quite frankly, it was deserved. I'm drowning in my debt and so is my husband because, while we both have master's degrees, he can't get a job! To be honest we have very little credit card debt, it's all Sallie Frickin' Mae, and it's forced us to move back in with my parents, I have a 3 hour daily commute to work and no end in sight. I think they must have skewed results, because most of my friends are in the same boat. And it's funny becasue OSU did the study and I live in OH!
Jun 9, 2011 8:17AM

The study found that the more debt these young respondents carried, the higher their self-esteem became and the more they felt in control of their lives.


Kids know *ick.

Jun 9, 2011 12:53PM
As a young person, 25, with a college degree, which came along with student loan debt as well as credit card debt, I can say that this study is embarrassing to me. I come from a large middle class family (five children) and I grew up understanding the concept of debt through seeing my parents stressed out and struggling with bills and such.  I didn't have wealthy parents to put me through college but I made the choice to go to hopefully be able to have a better life and make my parents happy, which came along with loans. This study in no way represents me or who I am. Being in debt makes me feel "empowered"?? You've got to be kidding me. 3 years out of college, I live paycheck to paycheck having to repay my loans and debt- that really makes me feel empowered let me tell you, it just seems ridiculous. This article is embarrassing and misrepresents me and the rest of the real, hard working young people who actually "get it". Where did they find these idiots? This has to be a joke right? When making "kids these days comments" and then proceeding to bash the youth, I don't fall into that category. I know a few of my peers who posted don't either.
Jun 9, 2011 11:34AM
It is obvious that the people that they interviewed for this survey are those who live in Beverly Hills don't have to worry about the debt they accrue because their rich parents have their back.  The debt is just "character builder" for the rich kids.  Real people, like many of those I have read in the comments below and are totally surprised, have to pay off the debts themselves and that is not empowering at all!!!
Jun 9, 2011 11:37AM
Just let's you know how much our kids are learning in this over priced liberal indoctrination that many call college. I personally hope my children learn a trade and actually work for a living instead of being taught that things like debt is a good thing. Only a moron would think being in debt is a good thing. I teach my kids if you can't pay cash for it, then you can't afford it.  
Jun 9, 2011 10:07AM

I think your results and/or questions are flawed. I borrowed about  $40k for school (BS and MS), which I paid off within 6 years after finishing. Even though I was lucky enough to get a job in the southeast US making $70k in my field, I was still very stressed by the loan payments. It was most definitely not a self-esteem builder.  


These classes that teach kids about repaying loans should also include a realistic look at what they can expect to make in their field, and balancing their loan payments with all the other everyday expenses.  

Jun 9, 2011 11:56AM
The future of America lies at the hands of these young people.  That's why America is in BIG TROUBLE!!
Jun 9, 2011 11:23AM

Just like the "$5/gas is good" story that pops up here occasionally, this one is equally absurd.

Jun 9, 2011 12:09PM
This article is proof positive that you can NEVER underestimate the human being's ability to rationalize.  Spin like this and mind sets that can "feel good" about debt will lead our country to an economical hole we will NEVER climb out of.  We might as well all start preparing to work for China for the rest of our lives. 
Jun 9, 2011 12:02PM
With age cometh wisdom-- well, if you're paying attention. I recall kind of feeling this way: "Hey, I owe a freaking $20k to all these people!  Wooo!"  It's the same kind of thing young people feel as they are careening through the air off a roof over to the top of another building.  The stuff you expect to see in a Jacka** movie, for example.  Notice that the people in those movies are all on the young side.

Yes, wait a couple years when the debt is nothing but an albatross, as they watch the money they make go into envelopes and get sent off to banks in return for... nothing today, but stuff they bought years ago, maybe stuff they can't even really point to or even had any tangible substance (eg: a college degree).  Wait til that settles in.  Then you get a different reaction.  You get misery.  Yes, with age cometh wisdom...

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