U.S. Students With High Loan Debt Get Poorer Grades

U.S. college students with a high amount of student loan debt are getting poorer grades, a new study has found.

Student loans allowed millions of U.S. citizens to access higher education when under normal circumstances, they would not be able to afford it. However, the new study published in the Journal of Social Sciences has found a "negative correlation between academic achievement and having a student loan." This is according to Professor Snorre Lindset at the Norwegian University of Science and Technology (NTNU) Department of Economics, who lead the study.

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"We hope our work will shed light on the correlation between academic performance and student debt," Lindset continued in a statement.

During the study, just under 900 undergraduate economics students in the U.S. were analyzed. Around 40 percent of participants had taken out a student loan, the study found. And over half of those that had, were already over $10,000 in debt.

The scientists used grade point averages (GPA) to asses how students in debt were doing in their studies, compared to those who did not have a loan. Overall, the students in debt had lower GPAs, that were unlikely to reach above 3.0. Debt-free students had a much higher chance of reaching a good GPA.

The researchers calculated that a loan-free student had a 26 percent greater chance of achieving good grades than their peers who were in debt.

Around 86 percent of participants in total were under 25 years old. Other notable findings were that older students tended to have a worse GPA than those that were younger.

But the main finding remains: the higher the loan, the worse the GPA.

"This happens regardless of gender, age and other factors we have taken into account," the researchers said in a statement.

The study also provides valuable insights into the student's economic background and their self-awareness.

The students were also asked a range of questions on how interest, money and finances worked, however only 20 percent got the answers right. This is despite the fact that seven out of 10 students reported that they were better than others at money management.

Until now, there had hardly been any research conducted into student loans and how they play into grade averages.

There are a number of possible reasons for the lower grades, for example, stress. A higher level of stress and anxiety caused by debt could link to students being less able to focus on their studies. However, this needs more research.

In 2023, the amount of student loan debt across the U.S. reached a total of $1.73 trillion. This is a record amount.

"We hope our work can contribute to prompting further thorough studies of the negative correlation we have found," Lindset concluded in a statement.

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This study was conducted alongside Professor Emeritus Gunnar Bårdsen and Peter Resch from the Department of Finance at the University of Central Florida in the United States.

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