The Effect of Student Loan Debt on Emergency Savings and the Moderating Role of Financial Knowledge: Evidence from the U.S. Survey of Household Economics and Decisionmaking

Document Type

Article

Source of Publication

Journal of Risk and Financial Management

Publication Date

9-21-2024

Abstract

This study examines data from the U.S. 2018 and 2019 Survey of Household Economics and Decision making (SHED) to understand the association between student loan debt and emergency-saving decisions, including the moderating role of financial knowledge. Controlling self-selection bias through a propensity score and coarsened exact matching approach, the findings reveal that individuals with student loan debt are less likely to save for financial emergencies. The findings also show that financial knowledge is positively associated with a higher likelihood of having emergency savings. Furthermore, the results from the moderating analysis indicate a statistically significant interaction effect. Based on the empirical results and the corresponding interaction plots, the findings suggest that targeted financial education may lead to improved financial outcomes for student loan borrowers, rather than assuming that such education occurred prior to a loan application.

ISSN

1911-8074

Publisher

MDPI AG

Volume

17

Issue

9

First Page

420

Last Page

420

Disciplines

Business

Keywords

Student loan debt, Emergency savings, Financial knowledge, Financial education, Financial outcomes

Indexed in Scopus

no

Open Access

yes

Open Access Type

Gold: This publication is openly available in an open access journal/series

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