A team of researchers at the University of Illinois at Urbana-Champaign and the University of Kansas have found a link between the college student loan debt and adult net worth earnings later on in life. It turns out that individuals who either left or graduated from college with debt ended up with fewer financial assets and homes with lower market values by the time they reached the age of 30, as compared to those who left school with no debt.
51% of the individuals in the study had student loan debt upon leaving college, with the average amount owed of $15,200.
Chief researcher Min Zhan, social work professor at the University of Illinois, said that, "In addition to negatively impacting young people in the short term, education loans may also compromise their financial well-being over the longer term." Zhan added that, “Both large and small amounts of education debt act as a barrier to future wealth building."
During the course of the study, the researchers discovered that subjects that had student loan debt earned or owned around $13,680 less than their peers with no outstanding loans. Many averaged $39,630 less in financial assets. Additionally, with 39 percent of study participants becoming home owners at age 30, those who started out with debt owned homes that were valued at $103,000 less than those without debt in the current housing market. Having the added burden of debt probably lowered their ability to afford more, due to high student loan payments or lower than average consumer credit scores.
Morale of the story for current learners is to have a solid plan for paying off debt quickly before or soon after graduation. The impact of stress in the workplace, particularly due to financial burdens, has been lately documented. Employers can also do their part by offering student loan repayment benefits for employees to reduce this burden.