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The Effect of Households’ Student Debt on Life Satisfaction

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Abstract

This study finds a negative effect of holding student-loan debt on the life satisfaction of household heads using longitudinal data from the 2011 to 2017 U.S. Panel Study of Income Dynamics and a fixed-effects modeling approach. Although debt is taken to improve future utility, it provides disutility to the head of household until it is paid off. Thus, financial planners and educators should remind their clients about the consequences of holding student-loan debt in the short term, not just the future benefits.

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Availability of Data and Materials

This paper uses the publicly available Panel Study for Income Dynamics data set. It can be found here: https://simba.isr.umich.edu/default.aspx.

Notes

  1. These values include those with zero balances.

  2. The average amounts of student debt owed by retired households with student debt are not shown on Appendix Table 2.

  3. The means for student debt percentage of household income are not shown in the Table for descriptive statistics.

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Acknowledgements

The authors thank Vickie Hampton, Conrad Lyford, Russell James, and Michael Guillemette for their insightful comments.

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Correspondence to Thomas Korankye.

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Appendix

Appendix

See Tables 1, 2, 3, 4, 5, 6, 7 and 8.

Table 1 Summary statistics for all households
Table 2 Summary statistics for retired households
Table 3 Random effects ordered probit model with Mundlak correction for life satisfaction (Model 1)—all households
Table 4 Random effects ordered probit model with Mundlak correction for life satisfaction (Model 2)—all households
Table 5 Random effects ordered probit model with Mundlak correction for life satisfaction (Model 1)—retired households
Table 6 Random effects ordered probit model with Mundlak correction for life satisfaction (Model 2)—retired households
Table 7 Random effects ordered probit model with Mundlak correction for life satisfaction (sensitivity)—all households
Table 8 Random effects ordered probit model with Mundlak correction for life satisfaction (sensitivity)—retired households

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Korankye, T., Kalenkoski, C.M. The Effect of Households’ Student Debt on Life Satisfaction. J Fam Econ Iss 42, 757–772 (2021). https://doi.org/10.1007/s10834-021-09753-9

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