Impact of Student Loans in the USA


Student loaning is a financial support provision that aims at supporting needy students to pay for their post-secondary education. These loans help students cater to their fees, tuition, learning materials such as books, and other living expenses. After borrowing these learning resources, students are expected to pay the money and accumulated interest over time. Despite the advantages of student loans, they attract an adverse outcome in their lives and the US economy. The emergence of a financial crisis in the US due to the provision of student loans continues to affect its economy. Most of the students experience challenges paying the debt. The outcome is a reduced financial pool meant to accelerate learning for needy social segments. Also, the government strives to finance other key developmental areas since it is forced to allocate more funds to the student loan docket. After the completion of their studies, the daily lives of the students revolve around poor mental, psychological status, and inadequate and decision-making because of the increased financial burden. Notably, learners fail to pursue their careers since they are forced to settle on a lesser paying job away from their area of interest to earn income. This permits them to pay the debts accrued over time. The educational system suffers a negative image and perception among potential learners. Overall, the impact of student loan debts has developed a crisis in the US economy, daily life, decision-making, and the educational system.

Adverse effect on the US Economy

Increasing student loan provision continues to threaten the US economy. The nation allocates massive resources to service student loans. As Ingraham (2019) states, American families carry about $1.6 trillion in student loan debt, which is approximately 8% of the national income. The amount doubled in the 20th century, creating an increased burden for the government. The effect of these loans on a critical sector such as business cannot be underestimated since it leads to reduced growth for small businesses. Igraham (2019) further states that one standard deviation in student debt translates into 14.4% reduced growth among small-based establishments. These businesses provide a high rate of employment, and their reduced growth means that most US citizens have poor access to job opportunities. The study outcome shows that an increased allocation of resources to the student loan fund affects the government’s focus on other areas of development.

The majority of the learners experience challenges paying the debt and this creates a challenge for the government. This leads to a financial crisis as the federal and state governments struggle to ensure progressive growth and development across all sectors. Undoubtedly, student loan debts remain a significant threat as it affects the US economy. It denies the nation the opportunity to invest in other essential segments that have massive potential for growing and advancing its economy. For example, small and medium businesses lack appropriate funding since a large segment of the national budget is allocated to the education sector (Ingraham, 2019). Failure to pay the loans advances the financial burden since the government needs to continue supporting more needy students while focusing on other critical developmental areas. Therefore, student loan debt accelerates the financial crisis that significantly affects the US economy.

Effect on Individual’s Daily Life and Decision Making

Student loan debts have an adverse outcome in their daily lives due to the increased prevalence of mental and psychological issues. The dream of every learner is curtailed by the inability to pay accrued debts after the completion of their studies. Financial challenges continue to accelerate exposure to health limitations. Most of the students who fail to pay the debt experience mental and physical illnesses. A study by Nissen, Hayward, and McManus (2019) shows that students with severe financial concerns possess worse mental health scores and poor psychological functioning than those with no debt responsibility. The research outcome indicates a dire need to adopt fundamental approaches to prevent learners from encountering mental and psychological problems. They often portray a tense mood, anxiety, and nervousness due to their pending debt. The emotional conditions are associated with a general feeling of failure, considering that the students have attained their educational milestones but cannot find jobs.  In some cases, students might face stigma in a context where personal responsibility is strong (Nissen, Hayward & McManus, 2019). Therefore, in their daily lives, they are more likely to experience mental and psychological challenges that affect their normal functioning. There is a clear indication that student loan debts have a significant impact on an individual’s daily life. Besides health, students also experience poor decision-making processes.

Student loan debts interfere with the ability to make viable decisions relating to marriage and family formation. Every student dreams and hopes to live a fulfilling life after the completion of their studies and the acquisition of their certifications. However, loan debt is likely to affect decision-making processes since they are more likely to prioritize loans. A study by Ingraham (2019) shows a strong link between women’s student loan repayment schedule and marital timing with a $1,000 increase in debt lowers the odds of marriage by 2% per month among female graduates. They often prioritize loan repayment at the expense of venturing into marriage and starting a family. Further research by Bahadir and Gicheva (2019) reveals that young borrowers who are credit constrained have to assume lower consumption when paying off their loans. They often cut basic requirements to create more room for loan repayment. They are also likely to forego marriages and families to concentrate on paying their dues and later think about venturing into marital unions after completing their payments. Commencing a family comes with heavy financial responsibility. Student loan debts thus affect autonomous decision-making since they are influenced by their current debt status when making vital life choices.

Poor Career Progression

The high student loan debt affects career growth and progression. Every learner selects a course that they believe can provide them with a job of their choice. However, this is not the case after graduating due to the massive challenges witnessed in the job market. A high number of graduates fail to access working opportunities within their area of study and result in finding any job that can support their lives and loan payment. The rising debt threatens the career path for the majority of the learners. A study by Eaton et al. (2019) highlights that the average debt per student increased by 18% from $12,628 in 20006 to $14,908 in 2013. The statistics show an increasing debt over time, causing major concern among the students living in the US. Financial distress has a significant effect on career selection and progression. A study by Nova (2019) indicates that over half of the students who owe the government $55,000 reported that they took a job outside their career field. Such an approach leaves little or no room to progress one’s career. The dire urge and need to pay the loan force most of these students to abandon their dreams and venture into another profession to earn an income that can enable them to the student loan debts. After graduation and unsuccessful chase for a job within the specification area, an individual might settle on low-paying jobs outside their domain for financial support. Therefore, student loan debts affect career selection and progression.

Effect on the Educational System

Expanding student loan debts accelerates a negative image and perception of college and university education among potential learners. The sector risks losing a high number of potential learners who would rather venture into other engagements than further their studies in these institutions. Possible student loan debts associated with furthering studies forces the students to avoid these learning establishments. Kaur (2019) states that in recent years, the number of students enrolled in higher education has declined tremendously. The high cost of college education and the financial burden associated with student loans demotivates students to join higher learning institutions. A survey study of US medical students revealed that students with higher educational debt are less likely to pursue primary care and practice in underserved regions (Chisholm-Burns et al., 2019). This indicates that most learners would be less willing to pursue a college education since it would leave them prone to increased debts. The US educational system witnesses a reduced pool of students targeting to fulfill their dreams and aspirations. Rather than venturing into a system that leaves them with an enormous financial burden, they would instead focus on other platforms that require a minimal investment of resources. For example, a student may decide to start an income-generating activity with minimal resources at hand than pursuing a college education. Therefore, student loan debts create a negative image and attitude towards higher institutions of learning.


Student loan debts pose a significant challenge for US based learners. Even though it offers appropriate financial support, it generates adverse outcomes for their lives and the US community. The United States government continues to encounter massive limitations due to resource shortages amidst a greater call to grow and advance its economy. The students themselves also encounter mental and psychological issues, poor decision-making, and career progression. Notably, the educational system is under the threat of losing a large segment of its student population since most of them are likely to keep off higher learning institutions. These adverse effects attributed to student loan debts call for the attention of various stakeholders to liaise and find lasting solutions to this menace. The educational needs of students from underprivileged backgrounds depend on the loaning provisions provided by the government. Thus, continued support ensures that students can pursue their studies. However, it is vital to develop and implement appropriate strategies that comfortably allow learners to pay their dues. A key element, such as high-interest rates, may be a barrier to adequate payment. Also, creating more job opportunities can accelerate the chances of getting a job and thus enabling these students to pay the loans comfortably. These approaches can improve individual’s lives and, at the same support progressive growth and development of the US economy.









Bahadir, B., & Gicheva, D. (2019). The Effect of Student Debt on Consumption: A State-Level Analysis.

Chisholm-Burns, M. A., Spivey, C. A., Stallworth, S., & Zivin, J. G. (2019). Analysis of Educational Debt and Income Among Pharmacists and Other Health Professionals. American Journal of Pharmaceutical Education, 83(9).

Eaton, C., Kulkarni, S., Birgeneau, R., Brady, H., & Hout, M. (2019). The organizational ecology of college affordability: Research activity, state Grant aid policies, and student debt at US public universities. Socius, 5, 2378023119862409.

Ingraham, C. (2019). Seven ways $1.6 trillion in student loan debt affects the US economy. Retrieved 7 July 2020, from

Kaur, H. (2019). The student loan debt is $1.6 trillion, and people are struggling to pay it down. Retrieved 7 July 2020, from

Nissen, S., Hayward, B., & McManus, R. (2019). Student Debt and Wellbeing: A research agenda. Kōtuitui: New Zealand Journal of Social Sciences Online, 14(2), 245-256.

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