“The stress and depression [over my debt] has gotten so bad at times that I’ve seriously thought about killing myself. I’ve thought more about walking into a financial aid office, or a bank, and just blowing everyone away. Why even bother robbing them, all cash is traceable now. No, I’d do it because my dead body or someone else’s dead body means someone else, somewhere else, has to do more paperwork than me for a change. I’d do it for the [laughs], basically.”
That was a disturbing comment in a Fark.com online forum discussing a recent article on the level of college loans for students currently held by young people in the United States in their twenties and thirties. Sadly, the feeling of frustration as exemplified by the anonymous Internet-poster will likely become increasingly common as the U.S. economy continues to linger in the doldrums for the foreseeable future (via Vox Day and Market Ticker) and more observers wonder whether people my age (thirty) and younger will be a “lost generation.”
When I was in high school in southern Illinois in the United States, I was a reporter, assistant news editor, business manager, and then editorial-page editor of the “Hy News,” my school’s monthly student newspaper. While in the latter position during my senior year, I wrote a column — like Katrina Trinko did in USA Today recently — decrying the goals of many of my fellow students to pursue degrees in college based solely on how much money their would prospectively learn. People, I argued, should study and then do that which they find interesting and makes them happy — like how I was going to Boston University to study journalism. In one response of many, a classmate asked me, “Do you know how much reporters make?”
After being laid off in 2007 from a job editing and running a non-profit, alternative newspaper in Boston, starting part-time MBA studies, remaining unable to find a job for months, moving to Israel, and then working now in international online-marketing while juggling student-loans as well, I wonder in retrospect whether she was correct.
When I was an undergraduate in BU from 1998 to 2002, my student loans were the furthest thing from my mind. I signed whatever loan papers had been put in front of me from Sallie Mae and others, and then I was off to study. I spent the four years worrying more about excelling in journalism classes and internships (mainly the latter). The money, I had thought, would take care of itself once I would become a superstar reporter.
It seems that I was not alone in my optimism. According to a Science Daily article on a new Ohio State University study:
Instead of feeling stressed by the money they owe, many young adults actually feel empowered by their credit card and education debts, according to a new nationwide study.
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.
I would bet that the majority of debt-increases-my-self-esteem responses were given by young people still in college or right out of university — namely, those who have had no economics education, little exposure to the so-called real world, and no experience with the financial realities of long-term planning for things including marriage, a mortgage, and retirement. Their self-esteem results not from the debt itself but rather the long-term benefits that they think the debt will provide (whether accurate or not). As the same study discusses later, these optimistic attitudes change later:
The oldest people in the study, those over age 28, were just starting to feel the stress of their debt…
By age 28, they may be realizing that they overestimated how much money they were going to earn in their jobs. When they took out the loans, they may have thought they would pay off their debts easily, and it is turning out that it is not as easy as they had hoped,” she said…
We found that the positive effects may wear off over time, but they still have to pay the bills. The question is whether they will be able to. There needs to be additional research to answer this question.
Still, I was not the only one with youthful, idealistic sentiments. As Council on Foreign Relations research associate Matthew C. Klein wrote in the New York Times:
My generation was taught that all we needed to succeed was an education and hard work. Tell that to my friend from high school who studied Chinese and international relations at a top-tier college. He had the misfortune to graduate in the class of 2009, and could find paid work only as a lifeguard and a personal trainer. Unpaid internships at research institutes led to nothing. After more than a year he moved back in with his parents.
Klein’s friend was not the only one. Now, as the amount of outstanding student-loan debt is greater than credit-card debt for the first time (PDF), more people are questioning whether college is worth the cost — including hedge-fund manager and author James Altucher as well as a new Princeton University study and BU economics professor Laurence Kotlikoff.