When Does My Future Begin? Student Debt and Intragenerational Mobility

Abstract

Higher education financing policy largely assumes that college graduates en-joy equal opportunities for economic mobility regardless of how they finance their degrees. To examine this contention, this study uses data from the Na-tional Longitudinal Survey of Youth 1979 to compare the time it takes to move up the economic ladder for young adult college graduates who acquired student debt and those who did not. Findings reveal that those who acquired student debt take longer to reach the midpoint of the net worth distribution than those who did not acquire student debt. In fact, even after controlling for key demographic differences, acquiring $10,000 in student loans—only one-third of the average student debt load—is associated with an 18% de-crease in the rate of achieving median net worth. Additionally, student debt may be associated with a slower rate of reaching median income; here, an ad-ditional $10,000 in student loans is associated with a 9% decrease in the rate of achieving median income, although graphical evidence suggests these differ-ences do not emerge until about age 35. These findings reveal inequities in current education financing policy.