"This award is funded under the American Recovery and Reinvestment Act of 2009 (Public Law 111-5)."
Young people today are coming of age in a time of unprecedented access to credit but limited job opportunities, resulting in a dramatic increase in indebtedness for young adults. Prior studies offer divergent views of debt: some see credit as an investment in the future, while others worry about overconsumption promoted by easy credit. The researchers evaluate these alternative views by studying the consequences of indebtedness for young adults? successful transition to adulthood. The PIs ask, does debt finance an orderly move into adult status, or does debt impede or delay educational and career attainment? The investigators consider education debt and credit card debt separately under the hypothesis that education loans are more likely to underwrite future successes while credit card debt may be a downward pull on successful transitions to adulthood. They also look separately at upper-class, middle-class and lower-class youth with the expectation that fewer alternative resources for lower-class origin youth will accentuate negative effects of debt, while greater alternative resources for upper-class origin youth will blunt many of the effects of debt. The investigators focus on young adults because young people in the contemporary period are the first generation to carry significant debt early in their careers. The study will use data from the National Longitudinal Study - Young Adult Sample (N=3,079). These data are collected every other year allowing the researchers to track youth through the years of transition to adulthood.
In terms of the broader impacts, developing a better understanding of the consequences of debt for young people is essential at this time for both scholarly and practical reasons. Increasing debt may well represent an important sea change in American society with significant implications for the nature and meaning of social inequality. Important questions are in need of answers. In particular, is taking on debt early in life indeed a sage investment or a disaster in the making? The consequences for both academic theories of stratification and for public policy are enormous.
