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PurposeThis study explores the role of rising US student loan debt in explaining income inequality.Design/methodology/approachThe study uses the autoregressive distributed lag (ARDL) modeling approach to explore the short- and long-run impact of college debt on income inequality in the US through quarterly data over the period 2000–2019.FindingsThe results demonstrate the detrimental impact of student debt on national and regional income inequality. Moreover, the regional analysis highlights a more pronounced impact of student debt on income distribution in South and West regions. The findings document that these regions, with the lower student debt proportions, have the lowest average cost of attending college. Finally, the analysis explores two potential channels – i.e. race and homeownership – that could explain the link between college student debt and income inequality.Practical implicationsThe results can be helpful for policymakers and researchers to formulate practical approaches for assessing and addressing the rising national student debt and income inequality.Originality/valueThis is the first, to the best of the author's knowledge, study that explores the impact of US college debt on income inequality.

This study looks to test the impact of student loan debt on the career choices of college graduates with majors in the arts in the USA. As earnings are on average lower and more variable for arts graduates when compared to graduates of many other fields, I hypothesize that student loan debt will decrease the likelihood arts graduates will work in jobs related to their major fields of study. National Survey of College Graduates data is used to test this hypothesis. I find that for arts graduates, owing on student debt decreases the likelihood of working in jobs closely related to their major fields by over 25% and decreases the likelihood they work as artists by over 30%. For all college graduates, the negative impact of student debt on working in closely related jobs to their major fields is only 3%. Student debt may have potential distributional impacts on who works as artists, as Black and Hispanic graduates and those whose parents did not attend college are more likely to have student debt and less likely to be working in jobs closely related to their major field of study. Policies that help to alleviate the debt burden on arts graduates, like debt relief, could help to mitigate these negative distributional impacts.

The study of student loan debt remains a timely and relevant higher education finance research and policy-oriented topic, especially when considering the alarming growth rates of student loan debt balances. The Quarterly Report on Household Debt and Credit released in May of 2018 shows that among all debt balances, student loans remain the only form of debt that virtually sextupled over the last 15-years, and this trend is not slowing down. Although aggregated trends are important, by definition they are limited in their capabilities to providing researchers, policy- and decision-makers with insights related to individual debt accumulation and, perhaps more importantly, with knowledge about the factors associated with variation of individual debt burden. Accordingly, the overarching goal of this study is to ameliorate this limitation in three meaningful ways. First, this is the first study that offers inferential estimates of the magnitude of student debt accumulation increase across two different decades (1991–2013) and institutional sectors (public 2- and 4-year colleges). Second, these estimates are based on student level undergraduate non-self-reported longitudinal loan debt disbursements. Third, the estimates not only account for individuals’ baseline differences at the moment of college entry, but also account for institution- and state-level indicators that took place during college enrollment and that may be related to the variation of student loan debt reliance. Two nationally representative samples (NELS and ELS) complemented with other institution- and state-level data were analyzed using doubly robust estimators build from propensity score weights and entropy balancing approaches that were robust to unobservable selection issues using Oster’s approach (J Bus Econ Stat 37(2):1–18, 2017). The results consistently indicated that, among all participants, student borrowing participation increased by 15 percentage points in the 2000s, compared to the 1990s, and individual debt accumulation at least doubled across decades. Notably, among 4-year degree holders, the 2-year path toward a 4-year degree consistently resulted in about 10% lower debt accumulation compared to the 4-year path toward a 4-year degree. Students who did not attain a 4-year degree were better served by having started college in the 2-year sector. In terms of overall debt increase, 4-year degree holders accrued about $8000 more on average than their counterparts did during the 1990s, however, the recent cohort also repaid about $11,000 more, on average (or three times as much), than participants did in the 1990s. These higher repayment behaviors observed among 4-year degree holders, resulted in similar amounts of their respective debt balances across decades. The implications are clear: students with higher propensities toward a 4-year degree attainment are likely to incur lower debt if they start college in the community college sector. However, before fully recommending this pathway, 2- and 4-year colleges’ articulation agreements should be strengthened to ease transfer and eventual degree completion. Without recommending consolidation or merger between 2- and 4-year institutions, researchers and policy makers can learn from the strategies implemented by successful cases such as Perimeter College and Georgia State. Finally, 4-year entrants with lower likelihood to attain a 4-year degree may be better served by beginning college in the 2-year sector instead. Predictive analytics and machine learning techniques can be used to identify these cases, as depicted in the discussion section of the study.

This study examines the role of financial socialization, financial knowledge, and receiving financial education on student loan repayment behaviors and related financial stress, as reported by the participants. From an analysis of the 2015 National Financial Capability Study dataset, we find that individuals who received financial education in an academic or professional setting were less likely to be late on student loan payments or worry about their student loan debt. Additionally, those who received both financial education and learned about finances from their parents were even less likely to worry about their student loan debt. The broader implications of the main findings for financial counselors, therapists, and planners are also discussed.

This study examines the relationship between student loan debt and civic engagement among college graduates, with particular attention to differential effects by field of study. Drawing on data from the College and Beyond II dataset, this research analyzes how varying levels of debt burden impact political and community participation among 1673 graduates, including 1059 liberal arts majors and 614 graduates from professional, STEM, and other fields. Employing OLS regression models with multiple measures of debt burden and distinct dimensions of civic engagement, this study finds that both medium and high levels of student loan debt (USD 201–500 monthly and >USD 500 monthly) are associated with significantly higher political engagement—a pattern that aligns with relative deprivation theory’s proposition that financial strain may motivate political action aimed at systemic change. This relationship is particularly pronounced among liberal arts graduates, who demonstrate stronger positive associations between debt and civic participation than their peers from other fields. Debt-to-income ratio analysis reveals a potential “sweet spot” at 10–15% of income, where debt appears to optimize civic engagement without overwhelming resources. These findings suggest that liberal arts education may fundamentally alter how graduates respond to financial constraints, potentially by providing analytical frameworks for understanding debt as a systemic issue and civic skills that facilitate participation despite economic pressures. The results challenge assumptions about debt’s uniformly negative civic consequences and highlight the importance of educational context in mediating economic effects on democratic participation.

Across three studies, the authors investigate the effect of student loan debt on spending. Evidence from consumer finance data and experimental scenarios reveals that borrowers with moderate student loan debt are less likely to spend than people with low (or no) debt. However, borrowers with high debt are more likely to spend relative to those with moderate debt. The latter effect is consistent with goal disengagement, as paying off high student loan debt seems difficult. Importantly, the spending propensity associated with high student loan debt is attenuated by presenting the debt in a monthly payment (vs. lump-sum) format, which reduces perceived payoff difficulty. From a public policy perspective, the authors recommend that estimated monthly payments be included in all student loan disclosures.

This study examines the effects of financial advice on college-saving decisions using data sets from the 2009 and 2012 U.S. National Financial Capability Study. After controlling for self-selection bias through propensity score matching, the findings show that receiving financial advice is associated positively with the likelihood of saving for children's college education. Other findings reveal that seeking specific types of financial advice relating to savings/investment, insurance, and tax planning is positively associated with a household's decision to allocate money for their children's postsecondary education. The ensuing discussion highlights that policies incentivizing households to seek financial advice could promote college savings and contribute to reduction in student loan dependence.

Objective. To evaluate educational debt-to-income trends in pharmacy, dentistry, medicine, optometry, and veterinary medicine in the United States from 2010 to 2016. Methods. A retrospective analysis of educational debt and income for selected health professions was conducted. Data on student loan debt were collected from professional organizations and data on income were collected from the American Community Survey. Ratios of the mean educational debt of graduating students to the median annual income for their respective profession were calculated for 2010 through 2016. Average change per year in debt, income, and debt-to-income ratio were calculated. Results. Debt-to-income ratios for all selected health professions except medicine exceeded 100%. For physicians, debt-to-income ratios ranged from 89% to 95%. On average, physicians (-0.3 percentage point) and optometrists (-0.5 percentage point) had negative changes in their debt-to-income ratios from 2010 to 2016. Average increases per year in debt-to-income ratio of veterinarians, pharmacists, and dentists were 5.5, 5.7, and 6.0 percentage points, respectively. From 2010 to 2016, dentists had the largest average increase per year in debt ($10,525), while physicians had the largest average increase per year in income ($6667) and a minimal average debt increase per year ($5436). Pharmacists had the second largest average increase per year in debt ($8356). Conclusion. Educational debt-to-income ratios in the United States increased considerably over the past decade among pharmacists, dentists, and veterinarians and can negatively impact health professionals as well as patient care. Innovative strategies are needed to alleviate the educational debt burden.

This research examined the influence of student loan debt on financial satisfaction using a sample of adults ages 18–54 from the 2015 National Financial Capability Study (NFCS). The study took advantage of the expanded set of variables related to student loan debt that was added to the 2015 wave of the NFCS survey. Results provided mixed evidence of student loan debt serving as an influential factor on consumer financial satisfaction. Whereas borrowing from multiple sources (federal and private) or private lenders only was associated with a lower likelihood of respondents indicating that they would make the same borrowing decisions, having student loan debt was not significantly associated with financial satisfaction. Implications for policy are considered.

This article assesses how the economic context of higher education expansion since the mid-20th century has shaped families’ financial lives—in terms of income and wealth/debt—as well as how these trends have differed for Black and White women and men. We use data from the NLSY-79 (comprising trailing-edge Baby Boomers) and NLSY-97 (comprising early Millennials) to show how academically similar students in these two cohorts fared in terms of educational attainment, household income, household wealth, and total student debt accrued by age 35. While we discuss findings across race-gender groups, our results call attention to the education-related economic disadvantages faced by Black women that have accelerated across cohorts. Over time, Black women’s educational attainment has increased substantially, and high-achieving Black women, in particular, have become uniquely likely to progress beyond the BA. But while high-achieving Black women have made many advances in higher education, they also have become more likely than similarly high-achieving White men, White women, and Black men to have zero or negative wealth at the household level, and to accrue student debt for themselves and for their children. Our findings demonstrate that the costs of expanded access to credit for higher education have not been borne equally across race, gender, and achievement, and that these patterns have multigenerational financial consequences for college attendees and their families.