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Academy of Financial Services Annual Meeting 2022

September 27–28, 2022

Virtual Conference via Zoom

Blind Optimism and Student Loan Debt

Tuesday, September 27, 2022 at 12:00 PM–12:55 PM EDT add to calendar

student loans, debt burden, financial aid, dispositional optimism

Short Description

This paper analyzes potential links between extreme optimism and student loan debt. Extreme optimism is associated with imprudent financial choices as evidenced by a variety of savings and investment decisions. This paper explores whether these findings apply to student loan decisions. Using the most recent administration of Survey of Consumer Finances (SCF) data, we present evidence that extreme optimists tend to have higher student loan balances both in absolute terms and relative to income. Extreme optimists are also less likely to make payments on their student loan debt or to complete a degree for which debt is acquired.

Lead & Corresponding Author

Thomas Charles O'Malley, PhD, USAF Academy Department of Management

Additional Authors

Brian C. Payne, University of Nebraska at Omaha