Does Education Loan Debt Influence Household Financial Distress? An Assessment Using the 2007–2009 Survey of Consumer Finances Panel

Families with student loans in 2007 have higher levels of financial distress than families without such loans, and these families also transitioned to financial distress at higher rates during the early stages of the Great Recession. This correlation persists once we control for a host of other demographic, work‐status, and household balance sheet measures. Families with an average level of student loans were 3.1 percentage points more likely to be 60 days late paying bills and 3 percentage points more likely to be denied credit. Families with other types of consumer debt were no more or less likely to be financially distressed. ( JEL D14, H81, I22)