How College Debt Affects Future Life Choices of Students


Student loans are offered to students pursuing advanced education in colleges and universities to help them finance their education. This includes tuition fees, paying rent, and buying educational supplies. In today’s world, education is an important component in attaining success in life. More and more occupations require one to have advanced education, a college degree or diploma, so as to be employed. This shows that a degree holder has a better chance of being successful in today’s workforce with guaranteed job security, better salary, career satisfaction, and lower unemployment rates. Moreover, college education helps a person have a better understanding of life as it contributes to the social and intellectual growth of the person. Despite all the benefits a college graduate gets and the obvious challenges a person with no advanced education has in the job market, most Americans have doubts about the effectiveness of the colleges and higher learning institutions in offering job security (Fishman, 2018). In this article, we will look at the impact of college loans on the future of students both in the social setting and the job market.

The Impact of College Loans on the Future of Students

After high school education, many students go on to colleges and universities to acquire advanced education that will make them suitable for the current job market. The introduction of new educational programs and curriculum that are at par with the technological advancements in the world today, tend to increase the tuition fee in these higher educational institutions. This burden is transferred to the students who are forced to seek financial aid in terms of grants or student loans. Students consider taking loans to help them pay for college tuition and fill financial gaps. Due to their great rates, they are easily accessible­­ and provide essential funds that can help cover educational expenses. In the United States, student loans make up the largest source of debt with more students still borrowing and adding to these figures. Over the years, the average student debt for a college graduate stands at 34,000 U.S. dollars. These figures keep rising exponentially and the consequences have already been felt (Looney, 2018). Huge college debts have a negative effect on the future of students as well as the economy at large.

The financial choices one makes early in life tend to negatively impact their lives in future. Most college graduates and students are financially illiterate and tend to take out loans and mismanage the money. In America, the most affected students are from middle class families who can initially afford to pay their educational expenses without borrowing. Young people, college graduates in particular, suffer the most as a result of student loan debts. This is because most of them have low incomes and are newly employed with no experience in the financial world.

An individual with student debt has a lower credit score, high debt burden, and limited purchasing power. This will affect the financial choices they make and decrease their ability to invest in the economy. With a younger generation that is struggling in debt, the economy will expand at a slower rate since most investments will be made by the older working population, which has a lower rate of creativity and diversification. According to an estimate by the Federal Reserve of the United States, student loans take away roughly 0.05% of GDP every year. An increase in the amount of student loans will increase the amount of money lost from the GDP every year and this will impact the economy negatively.

Secondly, college graduates with debt tend to put off life milestones and take low-paying and low-skill jobs so as to be able to pay their student debts right away. This minimizes their overall potential to enjoy the benefits of college education. Student loans are designed to accumulate interest after a few years and this adds more burden to students who are already struggling financially. Securing any job opportunity immediately after college is always seen as the best alternative to helping them clear their debts and pay monthly bills. Moreover, student debt does not only affect the financial independence and the standard of living of an individual, but also affects the dreams an individual can pursue in life. Studies by the Bureau of labor Statistics show that students with college debts are less choosy in their careers (Nissen, 2019). Students with higher student loans are less likely to be employed in jobs that are closely related to their major. Most of these people pick careers that will help them survive the harsh financial crisis they plunge into due to student loans.

Education is a continuing process and most people, after attaining their undergraduate degree, go on further to study for their post-graduate degrees. Having higher educational qualifications increases the employment chances and entry-level earnings of an individual. This is made impossible by the high student loans college graduates have to pay immediately after graduation. Most of them are demoralized because of the struggles they have to endure during the course of their studies (Goldrick-Rab, 2020). Moreover, they are unable to take another huge loan to finance their education because their credit score and borrowing capacity will already have decreased and they have no ability to pay off all that debt.

The mental and physical state of individuals with college debts is always in jeopardy. Having to think about their financial situation and finding ways to get themselves financially independent takes a toll on their minds. In today’s society, a well-educated individual is seen as successful and if they are unable to get a job, people criticize them and doubt their educational qualifications. This causes low self-esteem and such individuals tend to avoid interacting with their families and people in the community. People with huge sums of student loans suffer from depression and stress-related disorders. Most of them are unable to share their frustrations because of the fear that they will be judged and thus remain isolated. A study done by Shannon Insler in the United States shows that 80 % of employed people with student debts have significant stress. Continued stress causes insomnia, irritability, restlessness, and decreased focus. In addition to mental side effects, these individuals suffer from physical effects too (Nissen, 2019). The majority of individuals that have student debts in the U.S suffer from repeated headaches, muscle tension, and stomach upsets over a long period of time.

Additionally, students who have college debts are easily disqualified from job opportunities that would otherwise resolve their financial crisis. In the United States, reputable companies only higher individuals who have a good credit score and no past history of fraud or bankruptcy. According to a survey by CareerBuilder, 29% of employers in the United States conduct credit checks on new employees. An individual who paid their student loans late or has defaulted will have lower chances of being employed. Young employees’ career choices are usually money oriented and they tend to job-hop more often as compared to older counterparts. They readily quit their current jobs if another job with a better salary is available. Most companies want consistent employees. Young employees who are burdened by student debts are usually impatient and want jobs with better salaries that will enable them to survive (Goldrick-Rab, 2020). Companies will readily deny such individuals jobs since they are a liability to their growth potential. The majority of graduates who have student loans have financial strain and subsequent job search strain since their main aim is to secure a job that will help them pay off their debt.

In contemporary society, a normal adult is expected to have a social and economic life. Young graduates with huge amounts of college debt are forced to work in jobs that offer low wages and this lowers their ability to invest and actualize their dreams. Struggling to pay off college debts displaces money that is meant for personal development. Homeownership in the United States among college graduates aged 30 to 40 years that have college debts is lower. Most of these people are forced to live with their parents, trying to find ways to save and at the same time, clear their debt. Similarly, the rate of marriage and car ownership among young college graduates newly to the job market is low. This is attributed to the low levels of financial freedom these people have. The little money they earn is diverted into student debts and monthly bills leaving them broke (Velez, 2019). Since most of them have bad credit scores due to delays in student loan repayment or defaults, they are unable to acquire other loans that they can use to purchase a house or a car.

Having a huge amount of college debt can decrease your overall net worth. An individual with college debt has a lower net worth as compared to their counterparts who graduate with no college debt. This indicates that their counterparts have lower debts and higher asset ownership, making them financially independent. The wealth inequalities in current society is majorly attributed to the huge debts incurred by students during their college education. Most college graduates who struggle to pay their college debt in their 20s and 30s have problems building their own wealth. Students from middle and low-income households are disadvantaged since they will have to work harder and longer to be able to clear their debt as compared to their counterparts from high-income households. In a family where couples have an average college debt of about $60,000, their overall net worth for their entire working years will be reduced by almost half a million dollars. This is according to a study done by Demos (Luo, 2019). The financial uncertainty makes these graduates live in constant fear of a financial crisis before they achieve their goals.

There is a great difference between student debt and other types of loans. Student loans are unsecured and the borrower is expected to pay back after they complete their studies. By the time you are required to pay back, the money will already have been spent. This loan does not go away and even if the student defaults, the loan will incur interest and upon resumption of payment, the student is expected to pay the full amount. This has diffused the burden of student loans on parents. In the U.S alone, more than 2.2 million parents in their late 40s and 50s are struggling to pay for student loans that they took to finance their children’s education. This is according to a report by American Student Assistance. When offering student loans, parents act as guarantors for their children. When these children are unable to clear their loans, the parents take over the burden of paying. to be given student loans and when they are unable to pay, the parents take responsibility (Goldrick-Rab, 2020). This causes financial strain in a family and most times families fall apart. The graduates are forced to leave home and go fend for themselves hoping that they will achieve financial freedom.

In the United States, people spend more on health than any other sector. The government has introduced programs that will help reduce the burden of healthcare prices on its citizens, but it is not enough. Having less money to spend due to huge student debts is a major problem for people seeking healthcare services. The older American population is the most affected since they still pay student debts in their old age, forcing them to cut down on healthcare spending to make ends meet. The problem with student debt is that monthly payments are supposed to be made. Having to pay a loan every month decreases the ability of an individual to save. Most of these individuals go into retirement with no substantial amounts to help them live comfortably in old age. This greatly decreases their life expectancy as they are prone to life-style diseases due to stress and the inability to access better health services when they are sick (Kim, 2019). People with student debts have a higher prevalence of getting into more financial crises since they are forced to keep borrowing to sustain themselves.

In addition to student loans, young graduates also shoulder the burden of credit card debt. It is evident that credit card debt and student loan debt go hand in hand as a long-term effect of student loan debt. This is attributed to the fact that student loan debt drains a person’s monthly income and they are forced to use their credit cards for monthly bills. Having more debts worsens the financial situation of these borrowers and they are unable to pay off their credit card debts. Just like student loans, credit card debts are unsecured and students with low income and lots of expenses can access easily, putting them in a very bad financial situation. Continued reliance on debts by these young graduates puts them at risk of their funds being seized to help pay off their debts. In some instances, the government will impose a constant deduction on your salary every month to help with debt clearance.

Having the younger generation deep in debt does not only affect their ability to acquire homes but also affects the ability of those in starter homes to upgrade. Immediately when an individual gets a job, they purchase their first home with hopes that they will buy a better house when they have more money. With the current generation in debt, the already built houses are in low demand since most of them are living with their parents. The existing home owners are unable to upgrade to better houses since no one is there to buy their old houses. This also affects the housing industry since few people are able to own homes with their current financial ability (Velez, 2019). Also, if existing home owners are paying off student debts, they are unable to upgrade due to unavailability of enough funds to buy a better house.


In conclusion, college education offers an individual the opportunity to work in a field they are passionate about. They are also able to get better salaries and attain their life goals. This will only be possible if measures are put in place to cushion students from the huge student debts and enable them to pursue their dream careers. With the continued rise in tuition fees, the government and private entities should offer student scholarships without reducing the financial package a student receives over the course of their studies. Additionally, parents should be educated first on the different funding options they can access and ensure that students only access loans when deemed necessary. Grants, scholarships and other financial aid projects should be introduced with no repayment required.

Works Cited

Fishman, Rachel, Sophie Nguyen, and Ernest Ezeugo. “Varying Degrees 2018: New America’s Annual Survey on Higher Education.” Washington, DC: New America (2018). Web.

Goldrick-Rab, Sara, and Marshall Steinbaum. “What Is The Problem With Student Debt.” Journal of Policy Analysis and Management, vol. 39, no. 2, 2020, pp 533-552. Web.

Kim, Jinhee, and Swarn Chatterjee. “Student Loans, Health, And Life Satisfaction of US Households: Evidence from A Panel Study.” Journal of Family and Economic Issues, vol. 40, no. 1, 2019, pp. 36-50.

Looney, Adam, and Constantine Yannelis. “Borrowers with Large Balances: Rising Student Debt and Falling Repayment Rates.” The Brookings Institution: Washington, DC (2018). Web.

Luo, Mi, and Simon Mongey. “Assets And Job Choice: Student Debt, Wages And Job Satisfaction.” 2019 Meeting Papers. Vol. 1220. Society for Economic Dynamics. Web.

Nissen, Sylvia, Bronwyn Hayward, and Ruth McManus. “Student Debt And Wellbeing: A Research Agenda.” KĹŤtuitui: New Zealand Journal of Social Sciences Online, vol. 14, no. 2, 2019, pp. 245-256. Web.

Velez, Erin, Melissa Cominole, and Alexander Bentz. “Debt Burden After College: The Effect of Student Loan Debt On Graduates’ Employment, Additional Schooling, Family Formation, And Home Ownership.” Education Economics, vol. 27, no. 2, 2019, pp. 186-206. Web.

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ChalkyPapers. "How College Debt Affects Future Life Choices of Students." March 17, 2023.