Published November 18, 2021
Those worried about the state of higher education tend to cite woke students and campus controversies, but others have pointed to another, long-term problem: rising student-loan debt allegedly preventing young adults from getting married and starting a family. “You shouldn’t have to take on a mountain of debt and get a four-year degree you don’t want in order to get a good job,” Senator Josh Hawley has said. Declan Leary of The American Conservative argued last November that conservatives worried about low birth rates should acknowledge that “for college graduates the obvious route is to tackle student debt.”
But crushing student-loan debts aren’t necessarily causing young adults to give up on family formation. A report I wrote as a staffer with Congress’s Joint Economic Committee, released for the first time early this month, evaluates the evidence around family formation and the rising cost of college attendance. The bottom line: student debt is not the albatross around the necks of would-be newlyweds that it is often claimed to be. That doesn’t mean it isn’t a problem for some. Improving repayment options for those in difficult circumstances, while holding the line against the sweeping debt forgiveness being proposed by progressives, represents a better approach.
Falling fertility and rising student debt aren’t myths. Marriage and fertility rates have been on a steady decline, hitting record lows even before the pandemic year of 2020. At the same time, the share of young adults attending college hit a peak earlier this decade, and these students relied more than ever on student loans. In my paper, I find that the percentage of all households with any outstanding student debt rose from 8.9 percent in 1989 to 21.4 percent in 2019.
Media accounts often tie the debt and fertility trends together. One Wall Street Journal reporter spoke to a Chicago woman who graduated from a for-profit interior design school with six figures of debt. The graduate wondered aloud, “How could I consider having children if I can barely support myself?”
Yet declining marriage and fertility rates are happening across the board, while student-loan burdens are less widespread. The Federal Reserve finds that 70 percent of all U.S. adults, including 57 percent of those who attended college, have never incurred education-related debt. According to the American Enterprise Institute’s Beth Akers, two-thirds of millennials hold no student debt. A Brookings Institution report by Adam Looney and Constantine Yannelis argues that if “there is a crisis, it is concentrated among borrowers who attended for-profit schools and, to a lesser extent, 2-year institutions and certain other nonselective institutions”—not those carrying six-figure balances from elite programs that receive most media attention.
My report, analyzing data from the Survey of Consumer Finances, finds that the average household student-loan balance tends to be inflated by large outliers. Examining the median of the data, rather than the simple mathematical average, shows a much more gradual rise in student-loan burdens. Most of the observable effect on marriage and fertility comes from people who chose to attend graduate school.
Though debt and default rates may not be at the crisis levels touted by progressives, the timing of student debt may merit special consideration. The peak repayment timeframe for student loans coincides with the prime years for family formation. Even as the evidence suggests that some individuals with exceptionally high loan burdens, particularly women, are more likely to delay marriage, it is scarcer overall that student loans are associated with lower fertility. And on balance, large debt burdens are shouldered by a small subset of households, many with higher educational attainment and higher earning potential.
My research focuses on the nominal value of student loans—not the broader question of whether going to college leads one to push off starting a serious relationship, get married, or have a child. College graduates tend to get married later in life than do non-college attendees, though they get married at higher rates and have lower rates of out-of-wedlock childbearing. The type of person who willingly spends several years of his life pursuing a Ph.D. may have already been willing to forgo a family in pursuit of professional success. Even if college loans themselves do not directly hinder family formation, an excessive cultural emphasis on formal education can encourage a mindset that puts marriage and parenthood in the backseat.
But on the margins, public policy can reward or punish individuals for getting married. The tax code’s treatment of the student-loan interest deduction constitutes a marriage penalty. Currently, married spouses filing jointly can deduct $2,500 in student loan interest payments, the same amount as an individual. Increasing that cap to $5,000—the same as the two spouses would have gotten if they had remained unmarried—would be a straightforward fix. The Lifetime Learning Credit, which allows taxpayers to deduct qualified education-related expenses, has the same problem. Improving the poorly run Public Service Loan Forgiveness Program (which the Biden administration has taken steps to do) or introducing a set-aside for spousal income in income-driven repayment programs could further expand options for would-be spouses or parents.
No one wants young adults to be crushed by student loans. Supporting community college, trade schools, and nontraditional pathways to the workforce—as well as encouraging more competition in higher education—would help more young people increase their options without overreliance on debt. But sweeping loan forgiveness proposals such as those leading progressives are pushing would do nothing to improve the performance of higher education going forward. And the evidence suggests that these policies wouldn’t do much to boost rates of family formation, either.