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Young adults feel empowered by debt, new study says

Young adults feel empowered by debt, new study says

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SALT LAKE CITY — It used to be that adults did everything they could to avoid building up large amounts of debt and told their kids that owing less money was preferable to the alternative.

But a national study shows that instead of feeling stressed about the money they owe, many young adults actually feel empowered by their credit card and education debts.

The findings appear in a recent issue of the journal "Social Science Research."

Researchers at Ohio State University 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.

In fact, the effect was strongest among those in the lowest economic class.

Only the oldest of those studied — adults aged 28 to 34 — began showing signs of stress about the money they owed.

“Debt can be a positive resource for young adults, but it comes with some significant dangers,” said Rachel Dwyer, lead author of the study and assistant professor of sociology at Ohio State University. “Young people seem to view debt mostly in just positive terms rather than as a potential burden.”

The study involved 3,079 young adults who participated in the National Longitudinal Survey of Youth 1979 — Young Adults sample. The NLSY interviews the same nationally representative group of Americans every two years. The study was conducted by Ohio State’s Center for Human Resource Research on behalf of the U.S. Bureau of Labor Statistics.

While the study showed that many young adults thinks it's "cool" to incur debt, not everyone in that demographic agreed.

Brian Grimmett, a 24-tear old senior at Brigham Young University, had quite the contrary view. He said he has taken out about $15,000 in student loans to further his education, but has avoided building up excess amounts of revolving debt.

"We really just use [credit card]) for emergencies and to build credit," he said of himself and his 22-year old wife, Beth. "[We] try to stay away as much as possible from the credit card debt."

Grimmett, who has been married about a year, said while credit card debt is something to avoid, borrowing money for college is sometimes "a necessary evil." He believes that learning to manage finances is definitely a key to understanding one of the most important responsibilities of adulthood.

Meanwhile, another Utahn acknowledged that he had to learn debt management and fiscal responsibility "the hard way," despite getting sage advice on the perils of abusing credit cards from his parents while growing up.

As a very young adult, Mark Weber, 26, said he was taught to use credit only when needed and "to save your money."

Unfortunately, he fell into a lot of traps that young people do when they get credit card applications in the mail.

"I used credit cards too much and just paid the minimum payment on them," Weber explained. Eventually, he racked up nearly $20,000 in debt and has spent the last three or four years digging out of the deep financial hole and now "require[s] student loans" to attend college. Had he been more prudent early on, Weber said he could have saved more money for his education instead of giving it to the credit card companies.

As he prepares to enter BYU in the fall, he said he is now more responsible and has a clear idea of how to manage debt.

Overall, Dwyer said the study found that both kinds of debt had positive effects for young people.

"It didn’t matter the type of debt, it increased their self-esteem and sense of mastery,” she said.

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Jasen Lee


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