CHAMPAIGN, Ill. — Student loan debt may negatively impact young people’s ability to accumulate wealth after they graduate or drop out of college, a new study suggests.
People who had outstanding balances on their student loans when they graduated or dropped out of college had lower net worth, fewer financial and nonfinancial assets, and homes with lower market values when they reached age 30, according to a paper accepted for publication in the journalChildren and Youth Services Review.
“After controlling for various student characteristics and parental income, we found that having student loan debt when people graduated or dropped out of college compromised their ability to accumulate wealth afterward,” said principal investigator Min Zhan, a professor of social work at the University of Illinois.
For black young adults, leaving college burdened with student loans may be especially detrimental, diminishing their net worth by 40 percent compared with white students, the researchers found.