Unanswered questions on student debt and emotional well-being

Beth Akers:

Late last year, researchers at the University of South Carolina and the University of California, Los Angeles, published a report[1] on the relationship between student loan debt and psychological well-being. This study comes in the midst of a plethora of new research attempting to quantify causal relationships between student loan debt and personal outcomes (including home ownership,[2] entrepreneurship and the macro economy). Despite the intense interest in this issue among researchers, this is the first paper that attempts to understand the emotional cost of carrying student loan debt. This question is, in fact, more fundamental than the others being posed in this genre of research, since it could help to explain the mechanism through which debt may be affecting other outcomes. Using a strict classical lens to examine this issue might lead one to conclude that the true cost of carrying debt could be measured in strictly financial terms. However, the widespread and growing discontent among households with student debt paired with the evidence that the financial circumstances of borrowers haven’t radically worsened[3] suggests that an alternate lens may be necessary. In particular, a lens that considers the possibility that student loans take an emotional toll on borrowers, even when wealth is held constant.[4