With record unemployment, many consumers turn to debt in order to survive. Further, as consumers dip into savings to meet every day needs, debt is a necessity for more and more college students. As of the first quarter of 2020, the Federal Reserve reports that student debt nationwide has reached nearly $1.7 trillion. This represents more than a 100% increase over the first quarter of 2010 when student debt was just over $800 billion. As clients with college-bound children consider debt to cover the cost of higher education, counselors can help them make informed decisions. Two recent research articles analyze the students most likely to incur debt as well as the long-term impact of that debt.  


Beal, M., Borg, M. O., & Stranahan, H. A. (2019). The Onus of Student Debt: Who is Most Impacted by the Rising Cost of Higher Education? International Research Journal of Applied Finance, 10(8), 219 – 231.

Beal, Borg and Stranahan (2019)  attempt to determine the student characteristics and programs that best predict student loan debt.  They use a sample of 13,643 undergraduate students at a four-year institution in Florida who have completed the Free Application for Federal Student Aid (FAFSA). 

The authors use a two-step equation in order to estimate the determinants of accumulated student loan debt. The first model isolates the factors associated with holding debt. The second model investigates the characteristics of those who choose to take out debt. They find that age and race influence the decision to take out a loan and the amount of accumulated student debt.

They find significant differences across race and majors with African Americans being more likely to take out student loans but at lower amounts than whites. Further, they find that engineering majors have higher loan balances than business, health, and education students. They also find that transfer students are more likely to take out student loans but at lower amounts than students who do not transfer.


Velez, E., Cominole, M., & Bentz, A. (2019). Debt Burden After College: The Effect of Student Loan Debt on Graduates’ Employment, Additional Schooling, Family Formation and Home Ownership. Education Economics, 27(2), 186 – 206.

Velez, Cominole, and Bentz (2019) use data from the National Center for Education Statistics 2008/2012 Baccalaureate and Beyond Longitudinal Study to measure the effect of student loan debt on post-college outcomes. The authors use enrollment-weighted average in-state tuition over four years – to estimate the effect of debt on post-baccalaureate outcomes. They find that four years after graduating, undergraduate debt relates to borrowers’ earnings, job choice, decisions to marry and have children, and net worth. The authors found that four years after degree completion, for every additional $5,000 graduates had borrowed for undergraduate studies, they:

  • Had an additional 5% in earnings;  
  • Were 4% more likely to have a job related to their major;
  • Were 7% more likely to have a job that required a bachelor’s degree;
  • Had an 8% decrease in the likelihood of having been married;
  • Had a 5% decrease in the likelihood of having a child;
  • Had a 7% increase in the likelihood of their net worth being negative.

The authors, however, did not find support for debt influencing a borrower’s decision to work, the number of hours worked, the decision to enroll in a graduate program, or likelihood of purchasing a home.

Taken together, the results of these two studies are useful for clients with college-bound children. The studies show that African-Americans, engineering majors, and transfer students are the most likely to take out student loans. These loans often result in higher earnings and skilled jobs related to their major but negative net worth and a delay in starting a family. Of course, student loan debt does not predispose a student to these outcomes. Instead, the study authors argue that debt causes borrowers to make decisions that they would not make in the absence of debt. However, when managed appropriately, many borrowers realize positive outcomes. Counselors can help clients understand the positive and negative aspects of student loans as well as other alternatives for financing higher education. This exploration should also lead to a discussion on how long-term debt may affect future outcomes for borrowers and their families.

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