by Allan Carlson, Ph.D.

I am a social historian particularly interested in the interplay of public policy with family formation stability and fertility.

Dr. Baum’s commentary, “How Much Debt is Too Much?”, makes a compelling case for moving beyond the long assumed “8% of income” figure toward more flexible calculations based on “the life-cycle hypothesis.”  She also wisely emphasizes the importance of relative standard of living, which understands student borrowers to define their “manageable debt” in comparison to the living situations of their peers.  In other nations and times, this focus has been a useful analytical tool for understanding family change.

The limitation of her paper, though, is that it views student borrowers only as individuals, discrete examples of homo economicus: rational actors moving through their lives alone.  In fact, most young adults are in real or face potential new family relationships—notably as spouse or parent—which do or may complicate their lives and which require a more complex calculus.  Moreover, such relationships are not only individual concerns.  The future of every human society rests on the successful creation of new families.  In my allotted time, I would like to explore briefly the impact of student loan debt on family relationships.  (This impact is described in more detail in my paper, “‘Anti-Dowry’?” The Effects of Student Loan Debt on Marriage and Child-bearing,” commissioned by The Project on Student Debt, and available here today.)

To begin with, we should pause and consider, for a moment, the historically unusual nature of the “student loan” project.  In cultures around the globe and throughout history, the common practice has been to use “dowries” and other marital gifts to provide newlyweds with working capital—the opposite of debt.  This cultural strategy has aimed at social renewal by encouraging the founding of stable homes and the birth of children.  Indeed, until the last few decades, no known society had ever deliberately launched large numbers of young adults on their life course carrying substantial interest-bearing debt.  How is this peculiar social experiment working out?

Some work on this question has reported little influence of student loan debt on family formation.  For example, a National Center for Educational Statistics (NCES) study, using data on bachelor degree recipients in 1992/93, found about 50 percent of student borrowers to be “married or cohabitating as married in 1997,” equal to the 50 percent figure for non-borrowers.

However, other recent work suggests a different picture:

• Notably, the National Student Loan Survey conducted in 2002 finds 14 percent of student borrowers reporting that their debt burden has “delayed marriage,” up from 7 percent in 1991.  Also in 2002, 21 percent of student borrowers report that their debt burden has resulted in delays in “having children,” up from 12 percent in 1991.

• Research in both Australia and the United States shows a correlation between student loan debt and a rising propensity by persons, ages 20 to 29, to continue living with their parents.

• A study reported in the Journal of Marriage and Family finds student loan debt burden among young adults linked to a growing preference for cohabiting, rather than marriage.

• A 2005 inquiry by the Rochester Institute of Technology reports that nearly half of the young singles interviewed “indicate that their current debts will probably delay their plans to start a family.”

• A recent survey of so-called “marital strengths” closely associates debt burden with the quality of marriages.  Seventy-six percent of self-described “Happy Couples” report that major debts are “not a problem” for them.  Conversely, 56 percent of self-described “Unhappy Couples” state that “major debts are a problem for us.”

• Creighton University’s Center for Marriage and Family provides a detailed study of 42 potential problems facing young married couples.  For respondents in their 20’s, “debt brought into marriage” is rated the biggest problem they face (that is, greater than “in-laws” or “constant bickering” or “communication with spouse” and dozens of other possible answers).  Respondents married one year or less also report “debt brought into marriage” as their biggest problem.

We can also chart some preliminary numbers that may reflect the impact of student debt on subsequent family behaviors:

• The sharp decline in the marriage rate between 1984 and 2003 is concentrated among persons ages 20 to 24, where the burden of undergraduate debt would be most pronounced.  For young women, the decline is 42%; for young men, 45%.

• As indicated earlier, the marriage-discouraging pressure of student debt may be a factor in driving up the number of cohabiting couples by over 200 percent, from 1.6 million in 1980 to 4.9 million in 2000.

• Finally, during the 1980’s and 1990’s, there was a precipitous fall in the relative fertility of American women with four-year college degrees, compared to all American women.  In 1984, this ratio—that is, the Fertility of BA degree women <divided by> the Fertility of all American women—was .90.  This fell to .69 by 1995, when the Census Bureau stopped reporting these numbers.  This decline by nearly one-quarter isolates a special, new anti-natalist force active among the young college-educated.  As cause, the evidence points at least in part to student loan debt.

Those who crafted the federal loan program intended to stimulate investment in education, and so to improve what economists call “human capital”: the existence, skills, and knowledge of individuals.  In practice, the system appears to be contributing to the postponement of marriage and to the postponement or prevention of the birth of children.  Serving, oddly and unintentionally, as a highly effective form of contraception targeted on the college-educated, student loans may actually keep stable homes and new “human capital” (such as babies) from forming.

To be sure, there are many other social forces at work in our day that discourage marriage and childbearing: from the economic incentives of a mature market economy to cultural factors.  However, the apparent anti-marriage and anti-natal effects of student loan debt are the consequence of poorly conceived public policy.  Accordingly, policymakers have a special responsibility here to set things right.

So what should be done?  There have been and will be many ideas advanced today for reform of the student loan system.  Many of them, I suspect, will not address the inherent family problems that I have outlined.

And so, for the sake of argument, to propose a reform that would directly confront the problems.  Specifically:

For every new child born to (or adopted by) indebted married parents, the federal government would pay off one-fourth of their outstanding student debt, up to $5,000 each for mother and father (per child). 

This would mean that four children born to a couple could erase as much as $20,000 in debt per parent, or up to $40,000 per couple.  This measure expands on the concept of debt relief in exchange for responsible public service.  It would treat marriage and marital child-bearing as public goods.  It would immediately remove the policy-created disincentives toward marriage and child-bearing that young graduates now face, creating modest incentives in their place.  Once up and running, the annual cost of this debt forgiveness by the federal government would be no more than $8 to $10 billion, and predictably less.

Such a proposal has recent international precedents, in Quebec and Germany.  In my full paper, I offer answers to probable objections, including:  ‘Why favor marriage?’ and ‘Why create an incentive for more births?’ 

While referring to a similar situation in New Zealand, a recent student-backed report captured a troubling sentiment: also relevant to the United States:

The stories [told here] belie the government’s view that student debt will not impede borrowers lives.  The fact is that ex-students are struggling financially and emotionally because they have mortgaged themselves for an education…[one] that has created a ‘Debt Generation.’

These struggles, I conclude, also appear to have important—and negative—social, demographic, and economic consequences.