A parent's debt can affect their child's emotional well-being, study suggests

Researchers examined how different types of loans changed children's behaviour 

Kashmira Gander
Friday 22 January 2016 13:48 GMT
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(Clive Rose/Getty Images)

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The debts parents owe can negatively affect their child’s behaviour, according to a new study.

The US researchers behind the findings set out to understand whether parental debt such as a mortgage, student loan, car loan, and unsecured debt changed their offspring's emotional well-being.

In order to test their hypothesis, researchers assessed data from a national sample of over 9,000 children and their mothers, who were interviewed about behavioural problems between 1986 and 2008.

The evidence showed a link between how happy children were and the form of debt their paretns owed.

Children who showed higher levels of well-being lived in household where parents had mortgages and debt from education.

However, unsecured debt was connected with lower levels and declines in a child’s well-being.

Researchers surmised that investing in a home may give a child access better schools, while unsecured debts could mean a child does not have all of the resources and could cause a parent to become stressed.

The study carried out at the University of Wisconsin-Madison and published in the 'American Academy of Pediatrics' journal concluded that debt is not harmful in itself, and can be useful if invested in a home or education.

"Taking on student loans to go to college or a mortgage to buy a home may lead to better social and economic outcomes, whereas taking on unsecured debt, such as credit card debt or payday loans, that is not tied to such investments which may not," lead author Lawrence M. Berger of the Institute for Research on Poverty at the University of Wisconsin-Madison told Reuters.

He added that further research must be conducted to pinpoint the thresholds at which debt becomes an issue.

Berger went on to warn against blaming parents struggling with debt to for making poor financial choices, and said "many of those with credit card debt, medical debt, and payday loans took on such debt because they lacked other financial alternatives."

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