Why Your Education Won’t Save You From Faulty Financial Thinking
Researchers at Ohio State University say that the more educated you are, the more likely it is that you are piling up extra debt, and not just when it comes to student loans. This belies the notion that uneducated/undereducated people bear blame for the financial crisis.
A new study out from Ohio State University says that college-educated people are more likely to be carrying risky amounts of debt compared to people with less education. The researchers defined “risky amounts” as those that require more than 40 percent of the debtor’s income for payment. Also, people who had a more optimistic outlook about the future economy were more likely to have lots of debt. Researcher Sherman Hanna says, “People with college educations may have thought they were immune to any economic problems. But when people stop believing things might go bad, that’s when they get in trouble.” The debt load included not just student loans, but rent/mortgage, credit cards, and car loans, among other sources.
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What’s the Big Idea?
Contrary to what some may think, the financial crisis was not entirely due to higher debt burdens taken on by uneducated or less-educated people. Hanna says, “We just can’t blame the lenders and say they were exploiting uneducated people who didn’t know better. Many of those who got in over their heads were highly educated. There’s plenty of blame to go around…There wasn’t just one group of Americans who were at fault.”