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Study: Student Debt Buys Self-Confidence

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When I was 22, I’d yet to conquer “needs versus wants” and was living beyond my means.  My monthly credit card statement was often a source of anxiety and regret.

But young adults today don’t quite harbor the same emotions when it comes to debt. A new study suggests the more credit card debt and college loans a young person carries, the more proud and confident they feel. They actually believe they have more control over their lives.

In a mind-boggling study, researchers at Ohio State University and Pacific Lutheran University examined more than 3,000 adults ages 18 to 27 and concluded that young people, “experience debt as an investment in the future,” and that some tend to rely on credit—both student loans and credit card debt—as a means to getting an education and climbing life’s professional and social ladders. The feeling was most prevalent among young adults of lower economic status.

[Article: The Impact of Student Loans on Your Credit]

I didn’t quite understand this, so I asked Dr. Brad Klontz, a clinical psychologist and co-author of Mind Over Money for some analysis.

He said that, while historically debt may have been a source of embarrassment or shame, in recent years it’s become the norm. With the cost of living rising faster than wages, as well as college tuition surging each year, carrying debt has become somewhat socially expected. And for young adults conditioned to believe they can “do whatever they want to do,” debt has become a justifiable means to an end. “For many young people credit card debt is the consequence of feelings of entitlement… [the idea that] “I deserve nice things whether or not I can afford them,” says Dr. Klontz. In his own research, Dr. Klontz has found that lower socioeconomic status, in particular, has been associated with money-worshipping beliefs, the sense that more money and more things will bring us happiness.

Reality does set in eventually. The study also questioned those aged 28 to 34 and found many at that point in life show signs of stress over debt.  I don’t wish stress on anyone but it’s the type of emotion that—when properly addressed—can give us the kick-in-the-pants we need to make better decisions. I look back on my early 20s and think—thanks to being down-right scared about my financial life, I chose to take my life in a healthier direction and become debt-free.

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