Is student loan debt good or bad for full-time employment upon graduation from college?

Student loan debt represents an important phenomenon in the United States, as around 61% of bachelor’s degree recipients graduate with a debt of over $28,100. Although studies emphasize that holding student loan debt delays the transition to adulthood in terms of marriage and home ownership, little is known about its impact on employment and this limited research offers, at best, equivocal evidence. The current study draws from Conservation of Resources theory to argue that student loan debt acts as a major financial stressor for new labor market entrants during job search. Using archival data from 1,248 graduating seniors from 4 geographically diverse universities in the United States collected in the context of a prospective study design, we found evidence for 2 countervailing mechanisms through which student loan debt may influence full-time employment upon graduation. On the one hand, college students who had student loan debt were more likely to experience financial strain, and subsequently more job search strain, which was negatively related to college seniors’ odds of securing full-time employment upon graduation. On the other hand, this financial strain was also positively related to students’ work hours while in the last semester of college, which was positively related to their odds of securing full-time employment upon graduation. Further mediation tests revealed that only the 3-stage indirect effect through job search strain (i.e., student loan debt → fina...
Source: Journal of Applied Psychology - Category: Psychiatry & Psychology Source Type: research