Education loans and wealth building among young adults

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Date: July 2016
Publisher: Elsevier B.V.
Document Type: Report
Length: 333 words

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Abstract :

To access, purchase, authenticate, or subscribe to the full-text of this article, please visit this link: http://dx.doi.org/10.1016/j.childyouth.2016.04.024 Byline: Min Zhan [mzhan@illinois.edu] (a,*), Xiaoling Xiang (a), William Elliott III (b) Keywords Education loans; National Longitudinal Survey of Youth; Treatment-effect model; Wealth; Young adults Highlights * Having education loans is negatively related to young adults' net worth, financial and nonfinancial assets, and value of primary housing. * Having education loans has an additional negative link to the value of net worth among Black young adults. * The amount of education loans is not related to wealth accumulation among young adults with outstanding loans. Abstract With the use of education loans growing rapidly as a way to finance college education, it is important to examine how such loans impact the future financial well-being. This study examines the association between education loans and postcollege wealth accumulation among young adults, the group with the greatest share of outstanding education loans. Data come from 15 rounds of data of the 1997 National Longitudinal Survey of Youth, and the analyses control for a number of student characteristics, college experiences, and parental income. Results from a treatment-effects model indicate that having education loans upon leaving college is negatively related to postcollege net worth, financial assets, nonfinancial assets, and value of primary housing. Furthermore, having education loans also has an additional negative link to the value of net worth among Black young adults. The relationship between the amount of education loans and wealth accumulation is not statistically significant among those with outstanding loans. The study findings indicate the importance of developing alternative approaches, instead of additional loans and other credits, to meet the financial needs of college students. Author Affiliation: (a) School of Social Work, University of Illinois at Urbana-Champaign, 1010 West Nevada Street, Urbana, IL 61801, United States (b) Center on Assets, Education, and Inclusion, School of Social Welfare, University of Kansas, United States * Corresponding author. Article History: Received 20 February 2016; Revised 28 April 2016; Accepted 30 April 2016

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Gale Document Number: GALE|A522582791