Abstract:
Higher education financing policy largely assumes that college graduates enjoy
equal opportunities for economic mobility regardless of how they finance
their degrees. To examine this contention, this study uses data from the National
Longitudinal Survey of Youth 1979 to compare the time it takes to
move up the economic ladder for young adult college graduates who acquired
student debt and those who did not. Findings reveal that those who acquired
student debt take longer to reach the midpoint of the net worth distribution
than those who did not acquire student debt. In fact, even after controlling for
key demographic differences, acquiring $10,000 in student loans—only
one-third of the average student debt load—is associated with an 18% decrease
in the rate of achieving median net worth. Additionally, student debt
may be associated with a slower rate of reaching median income; here, an additional
$10,000 in student loans is associated with a 9% decrease in the rate of
achieving median income, although graphical evidence suggests these differences
do not emerge until about age 35. These findings reveal inequities in
current education financing policy.
