I suspect that most of this has to do with the fact that young people tend to feel “invincible,” but it’s pretty interesting nonetheless:
From the article:
For this study, the researchers examined data on two types of debt: loans taken out to pay for college, and total credit-card debt. They looked at how both forms of debt were related to people’s self-esteem and sense of mastery – their belief that they were in control of their life, and that they had the ability to achieve their goals.
…Researchers found that the more credit card and college loan debt held by young adults aged 18 to 27, the higher their self-esteem and the more they felt like they were in control of their lives. The effect was strongest among those in the lowest economic class.
Only the oldest of those studied – those aged 28 to 34 – began showing signs of stress about the money they owed.
If anyone wondered just why it is that lending institutions make such an effort to get young adults into debt, well, wonder no more. You can build up an immense pile of debt between the ages of 18 and 28. By the time the invincibility of youth has worn off and reality has set in, your next 20 or 30 years of payments are already set in stone.
Then, when that “expected future income” thing doesn’t pan out, you get a host of nasty little outcomes — like one in five student loans being in default.
More from the study:
But how debt affected young people depended on what other financial resources they had available, the study found.
Results showed that those in the bottom 25 percent in total family income got the largest boost from holding debt – the more debt they held, both education and credit card, the bigger the positive impact on their self-esteem and mastery.
Those in the middle class didn’t see any impact on their self-esteem and mastery by holding educational debt, perhaps because it is so common among their peers that it is seen as normal. But they did see boosts from holding credit-card debt – the more debt, the more positive effects.
Whoopee. And the debt-induced beat goes on … so long as you get ’em hooked young!