Sunday, 19 June 2011

Student + Debt = Joy

One of my daughters graduating last week

  According to an article in the New York Times by Ann Carrns today, the more debt that students incur the higher their self esteem.
“The more college loans and credit-card debt that young adults 18 to 27 have, the higher their self-esteem — and the more control they feel they have over their lives. They tend to view debt positively, rather than as a burden.”
  This surprising conclusion from a sociological study of college students was reported by Rachel Dwyer, an assistant professor of sociology at Ohio State.
  In the study, this positive effect of debt was most pronounced in lower and middle class students who “focus on credit as a necessary investment in status attainment” while upper class students did not appear to psychologically benefit from increased levels of debt.  Pity those trust fund kids.  For me this seems to be another example of magical thinking as expounded in Barbara Ehrenreich’s book, “Bright sided.”

  I checked the author’s CV and noted another paper published in 2010 titled,” Poverty, Prosperity, and Place: The Shape of Class Segregation in the Age of Extremes.” The basic conclusion was that rich, white people don’t live where poor, Black and Hispanic people reside and the wealthy either live on large lots in the suburbs or upscale enclaves in the city.


  1. Yes, I was *taught* to view it positively. I would have thought it important to have savings, but I was *taught* it was more important to "establish credit." And there is an illusion of power in being able to do things you normally couldn't -- e.g. if my parents get really sick I will be able to put a flight and a rental car on a card, immediately, and just go there in a middle class manner. It is of course yet more powerful to be able to do this in cash but many don't imagine that ever.

    I just helped my yard man buy an airline ticket online, with his debit card. He's actually in a better situation than I am, buying in money, but it's interesting how "disempowered" he feels not having all the middle class things ... it limits access to certain activities and spaces, and that's why having credit feels empowering, I think.

  2. My husband has no history of credit. Never owned a credit card and refuses all efforts of credit card companies to give him one. He has a PhD in Financial Statistics and doesn't feel declassed or disempowered because he owes nothing. Just the opposite.

    I only wish I had been as smart as he was in grad school.

  3. I was smart in graduate school but succumbed in the 90s, as an assistant professor, to the prevailing ideology of: "Spend what it takes to get to the MLA/LASA, don't take extra teaching or consulting to do that, realize that once your book(s) come out you'll have a big raise and pay it all off," and "Don't risk tenure/other good opportunities for the sake of saving a few bucks."

    It was ludicrous logic, really, and I think boilerplate advice really designed to shake loose people who refuse to do things like dental work because it's "too expensive" -- thus incurring greater expense later on.

    It looks like I may finally be out from under it next year some time but in terms of life earnings / investments I'm permanently behind because of this.