How Student-Loan Debt, or Not Having It, Shapes Lives

Without student loans, millions of Americans couldn’t afford the degrees that might smooth the road to prosperity. Yet, having student loans can also make it tougher to get far along that journey.

People who leave school without loans can have an easier time buying a home, saving for retirement or starting a business, compared with those who have student debt. One aim of President Biden’s student-debt relief plan, currently stalled by legal challenges, is to help borrowers shed debt and progress toward those goals, though critics argue the program is unfair to those who sacrificed to pay for college or pay down their debt.

Research from the Federal Reserve found that, between 2005 and 2014, there was a link between rising student debt and the reduced share of young adults who own a home. Carrying student debt is also associated with being less likely to start a small business, according to research from the Philadelphia Fed, and with being more likely to delay having children, according to researchers at Ohio State University.

Furthermore, college graduates with student debt have built up an average of about $9,000 in retirement assets by age 30—half as much as those without student debt, according to a 2018 study from the Center for Retirement Research at Boston College.

“Student debt is a new stratification system,” says Charlie Eaton, an associate professor of sociology at the University of California, Merced who studies economic disparities in higher education. “It confers a set of advantages at the end of college for people who are debt-free over people with student debt.”

Being debt-free isn’t itself a guarantee of prosperity, and even with student loans, Prof. Eaton says, “you’re probably mostly better off going to college, though that’s not true for everyone.”

It isn’t surprising that those without student debt often hit financial milestones sooner than borrowers do. Notably, these graduates say they also feel more freedom to take personal and professional risks or to pursue passions and alternate paths.

Skyler McKinley, a 30-year-old in Denver, says he wouldn’t have been able to accept his first job working for $34,000 a year if he had graduated with debt. That job, deputy director of a state agency in charge of Colorado’s then-novel regulations on recreational-marijuana sales, was instrumental in launching his career, he says.

“I graduated with so much more freedom because there were no bills that came due,” says Mr. McKinley, who now works in communications at a national consumer group. He funded his education at American University through survivors’ benefits from his late father’s job as a state judge and a merit scholarship.

Mr. McKinley says that being debt-free put him in a better position, financially and psychologically, to take out loans to buy a condo in Denver for about $300,000 in 2018 and a bar for a similar amount last year.

Owning a bar was a long-held dream, though the Oak Creek Tavern only breaks even, Mr. McKinley says. “I wouldn’t have taken that risk if I was also servicing and paying debt,” he says.

The majority of recent four-year college graduates took on at least some student debt. For the class of 2021, 46% of bachelor’s degree recipients had none, according to the College Board, a nonprofit. Among Americans with a bachelor’s degree, 64% of those who didn’t take on student debt report their financial status as “living comfortably,” while 36% of those who currently hold debt say the same, according to a Fed survey.

The median monthly student-loan bill is between $200 and $299, according to data from the Fed, and many borrowers pay significantly more. In 2021, 12% of debt holders were behind on their payments, according to Fed data, and the rate was higher for Black and Hispanic borrowers, who Prof. Eaton notes face disadvantages in the labor market and tend to come from less family wealth.

Some critics of Mr. Biden’s plan argue that student-debt relief unfairly favours some well-paid college graduates over Americans without a college degree, who might be more financially insecure. Republican Sen. Mitch McConnell has called the plan “a slap in the face to every family who sacrificed to save for college, every graduate who paid their debt, and every American who chose a certain career path or volunteered to serve in our Armed Forces in order to avoid taking on debt.”

Whether or not a college student takes on debt comes down to family finances, academic achievement and, sometimes, chance. Those whose parents can afford to pay full tuition might also benefit into adulthood from having a financial safety net and family connections.

Rachel Romer, co-founder and chief executive of Guild Education, has seen firsthand the difference it makes to not have student loans. In what she calls an “A/B test on affordable education,” one side of her family—21 of her siblings and cousins, plus Ms. Romer—had their college tuition paid with money from a family business started by her grandfather, while the other side—20 cousins—didn’t have shared wealth to draw on.

This family history served as an inspiration for her to start Guild, a platform for employers to provide education benefits to workers that can be accessed debt-free. Ms. Romer, 34, says that having a family that could afford to put her through Stanford University gave her the financial freedom to attend business school and start her company at age 26.

Emerging from college without debt can also give some graduates the space to map out alternative paths after college.

Since Frank Teng graduated in 2013, one guiding question when he is faced with a big decision has been, “What would make for a better story?” Mr. Teng, a 31-year-old user-experience designer in Houston, received a full scholarship from Yale University after being connected with the school by QuestBridge, a nonprofit that matches colleges and low-income applicants.

With no loans, he was more comfortable putting money toward a mid-college gap year backpacking in Southeast Asia, therapy in his late 20s and a monthlong wilderness-survival training earlier this year. If he had amassed debt, he says his pursuit of a good story would have been less of a priority than paying off all his loans.

GENOA, Italy—Renato Zanelli crossed the finish line with a rusty iron hanging from his neck while pulling 140 pounds of trash on an improvised sled fashioned from a slab of plastic waste.

Zanelli, a retired IT specialist, flashed a tired smile, but he suspected his garbage haul wouldn’t be enough to defend his title as world champion of plogging—a sport that combines running with trash collecting.

A rival had just finished the race with a chair around his neck and dragging three tires, a television and four sacks of trash. Another crossed the line with muscles bulging, towing a large refrigerator. But the strongest challenger was Manuel Jesus Ortega Garcia, a Spanish plumber who arrived at the finish pulling a fridge, a dishwasher, a propane gas tank, a fire extinguisher and a host of other odds and ends.

“The competition is intense this year,” said Zanelli. Now 71, he used his fitness and knack for finding trash to compete against athletes half his age. “I’m here to help the environment, but I also want to win.”

Italy, a land of beauty, is also a land of uncollected trash. The country struggles with chronic littering, inefficient garbage collection in many cities, and illegal dumping in the countryside of everything from washing machines to construction waste. Rome has become an emblem of Italy’s inability to fix its trash problem.

So it was fitting that at the recent World Plogging Championship more than 70 athletes from 16 countries tested their talents in this northern Italian city. During the six hours of the race, contestants collect points by racking up miles and vertical distance, and by carrying as much trash across the finish line as they can. Trash gets scored based on its weight and environmental impact. Batteries and electronic equipment earn the most points.

A mobile app ensures runners stay within the race’s permitted area, approximately 12 square miles. Athletes have to pass through checkpoints in the rugged, hilly park. They are issued gloves and four plastic bags to fill with garbage, and are also allowed to carry up to three bulky finds, such as tires or TVs.

Genoa, a gritty industrial port city in the country’s mountainous northwest, has a trash problem that gets worse the further one gets away from its relatively clean historic core. The park that hosted the plogging championship has long been plagued by garbage big and small.

“It’s ironic to have the World Plogging Championship in a country that’s not always as clean as it could be. But maybe it will help bring awareness and things will improve,” said Francesco Carcioffo, chief executive of Acea Pinerolese Industriale, an energy and recycling company that’s been involved in sponsoring and organizing the race since its first edition in 2021. All three world championships so far have been held in Italy.

Events that combine running and trash-collecting go back to at least 2010. The sport gained traction about seven years ago when a Swede, Erik Ahlström, coined the name plogging, a mashup of plocka upp, Swedish for “pick up,” and jogging.

“If you don’t have a catchy name you might as well not exist,” said Roberto Cavallo, an Italian environmental consultant and longtime plogger, who is on the world championship organizing committee together with Ahlström.

Saturday’s event brought together a mix of wiry trail runners and environmental activists, some of whom looked less like elite athletes.

“We like plogging because it makes us feel a little less guilty about the way things are going with the environment,” said Elena Canuto, 29, as she warmed up before the start. She came in first in the women’s ranking two years ago. “This year I’m taking it a bit easier because I’m three months pregnant.”

Around two-thirds of the contestants were Italians. The rest came from other European countries, as well as Japan, Argentina, Uruguay, Mexico, Algeria, Ghana and Senegal.

“I hope to win so people in Senegal get enthusiastic about plogging,” said Issa Ba, a 30-year-old Senegalese-born factory worker who has lived in Italy for eight years.

“Three, two, one, go,” Cavallo shouted over a loudspeaker, and the athletes sprinted off in different directions. Some stopped 20 yards from the starting line to collect their first trash. Others took off to be the first to exploit richer pickings on wooded hilltops, where batteries and home appliances lay waiting.

As the hours went by, the athletes crisscrossed trails and roads, their bags became heavier. They tagged their bulky items and left them at roadsides for later collection. Contestants gathered at refreshment points, discussing what they had found as they fueled up on cookies and juice. Some contestants had brought their own reusable cups.

With 30 minutes left in the race, athletes were gathering so much trash that the organisers decided to tweak the rules: in addition to their four plastic bags, contestants could carry six bulky objects over the finish line rather than three.

“I know it’s like changing the rules halfway through a game of Monopoly, but I know I can rely on your comprehension,” Cavallo announced over the PA as the athletes braced for their final push to the finish line.

The rule change meant some contestants could almost double the weight of their trash, but others smelled a rat.

“That’s fantastic that people found so much stuff, but it’s not really fair to change the rules at the last minute,” said Paul Waye, a Dutch plogging evangelist who had passed up on some bulky trash because of the three-item rule.

Senegal will have to wait at least a year to have a plogging champion. Two hours after the end of Saturday’s race, Ba still hadn’t arrived at the finish line.

“My phone ran out of battery and I got lost,” Ba said later at the awards ceremony. “I’ll be back next year, but with a better phone.”

The race went better for Canuto. She used an abandoned shopping cart to wheel in her loot. It included a baby stroller, which the mother-to-be took as a good omen. Her total haul weighed a relatively modest 100 pounds, but was heavy on electronic equipment, which was enough for her to score her second triumph.

“I don’t know if I’ll be back next year to defend my title. The baby will be six or seven months old,” she said.

In the men’s ranking, Ortega, the Spanish plumber, brought in 310 pounds of waste, racked up more than 16 miles and climbed 7,300 feet to run away with the title.

Zanelli, the defending champion, didn’t make it onto the podium. He said he would take solace from the nearly new Neapolitan coffee maker he found during the first championship two years ago. “I’ll always have my victory and the coffee maker, which I polished and now display in my home,” he said.

Contestants collected more than 6,600 pounds of trash. The haul included fridges, bikes, dozens of tires, baby seats, mattresses, lead pipes, stoves, chairs, TVs, 1980s-era boomboxes with cassettes still inside, motorcycle helmets, electric fans, traffic cones, air rifles, a toilet and a soccer goal.

“This park hasn’t been this clean since the 15 century,” said Genoa’s ambassador for sport, Roberto Giordano.

How Student-Loan Debt, or Not Having It, Shapes Lives

To better understand the impact of student debt on borrowers, consider the trajectories of those who never took out loans

At the World Plogging Championship, contestants have lugged in tires, TVs and at least one Neapolitan coffee maker