Student Loan Debt and Financial Well-Being of the Borrower: Does It Matter Whom the Debt Is For?

Korankye, T., & Kalenkoski, C. M. (2021). Student Loan Debt and Financial Well-Being of the Borrower: Does It Matter Whom the Debt Is For?. Journal of Personal Finance, 20(2).

16 Pages Posted: 4 Apr 2022

Date Written: May 20, 2021

Abstract

Using data from the 2017 U.S. Survey of Household Economics and Decisionmaking (SHED), this study classifies student debt into three categories by beneficiary (self, spouse, and children) and examines the relationship between each category and financial well-being. The results show that the association of student debt with the financial well-being of borrowers is negative and significant, regardless of whether the loan is used to finance the education of the borrower, spouse, or children. The paper further finds evidence that the marginal effect of student debt on the financial well-being of the borrower is substantial when the debt is used to finance the education of children rather than the education of the borrower or the borrower’s spouse. The implications of the study for practitioners are discussed.

Keywords: Student debt, student loans, children’s education, financial well-being

JEL Classification: G51, I12, I31

Suggested Citation

Korankye, Thomas and Kalenkoski, Charlene M., Student Loan Debt and Financial Well-Being of the Borrower: Does It Matter Whom the Debt Is For? (May 20, 2021). Korankye, T., & Kalenkoski, C. M. (2021). Student Loan Debt and Financial Well-Being of the Borrower: Does It Matter Whom the Debt Is For?. Journal of Personal Finance, 20(2)., Available at SSRN: https://ssrn.com/abstract=4055654

Thomas Korankye (Contact Author)

University of Arizona ( email )

650 N Park Ave
Tucson, AR 85721
United States
8067019412 (Phone)

Charlene M. Kalenkoski

Texas Tech University ( email )

2500 Broadway
Lubbock, TX 79409
United States

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