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American Young Adults’ Debt and Psychological Distress


This study explored the impact of student loan and credit card debt on young people’s psychological distress. Targeting American young adults ages 18–28, we examined the impacts of student loan and credit card debt on psychological distress and estimated their relative magnitude using five biannual waves from the Transition into Adulthood Study. Fixed-effects models investigated whether changes in debts led to changes in psychological distress. Increases of $1000 in student loan and credit card debt resulted in 6% and 4% higher odds of distress, respectively. Comparison showed credit card debt inflicted twice as much stress. Implications on young adults’ debt reduction and distress alleviation are addressed.

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Fig. 1


  1. An abbreviation of The Credit Card Accountability Responsibility and Disclosure Act of 2009.

  2. About 8% paid the minimum, 26% paid more than the minimum but not the full balance, and 1% paid less than the minimum.

  3. “Indebted,” “indebtedness” and “leveraging” are used interchangeably in this paper.

  4. If the first disbursement was received on or after July 1st, 2015 and before June 30th, 2016.

  5. Dollar values were in US currency.

  6. For example, coefficient of 0.05 was converted through exp (0.05) = 1.0513, indicating a 5% higher likelihood to be classified in a certain group.

  7. For example, the interest rate for undergraduate Direct Subsidized Loans reduced from 4.29% first disbursed on or after July 1st, 2015 and before June 30th, 2016 to 3.76% first disbursed on or after July 1st, 2016 and before July 1st, 2017.

  8. For example, the Consumer Financial Protection Bureau (CFPB) released “Consumer Credit Trends” in December 2016, a new online tool for consumers to inquire information on lending market such as delinquency rates of different types of loans or borrowers’ debt levels.


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Correspondence to Qun Zhang.

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Qun Zhang and Hyungsoo Kim declare no conflict of financial or non-financial interests, directly or indirectly.

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This study does not contain any studies with human participants performed by either of the authors.

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Zhang, Q., Kim, H. American Young Adults’ Debt and Psychological Distress. J Fam Econ Iss 40, 22–35 (2019).

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  • Student loans
  • Credit card debt
  • Psychological distress
  • American young adults