Americans between the ages of 19 and 29 ended 2018 collectively owing more than $1 trillion in debt, the highest level for young adults since the end of 2007.
According to a report in Bloomberg, citing the New York Federal Reserve Consumer Credit Panel, student loans comprised the majority of the debt carried by this group of Americans, with mortgages coming in second. New mortgages among those between the ages of 19 and 29 are lower than in the early part of the 2000s, which implies that adults in the U.S. are extending the age at which they purchase homes. It also indicates that they are willing to rent for longer than past generations.
Student loan debt is also growing at a much faster rate than mortgage debt. The report noted that since 2009, mortgage debt has risen 3.2 percent, compared to 102 percent growth in student loan debt in the same time frame. On the whole, student loans are second only to mortgages in terms of the largest consumer debt segment.
Even more worrisome is that student loans that are 90 days or more delinquent are at a higher percentage than any of the other loan types. This could have long-term negative ramifications on the credit profiles of young adults for years to come, and could also hurt a person’s chance of getting a mortgage, impacting other areas of the economy.
These debt levels can have long-lasting effects on young adults’ spending as well. The report pointed to a recent University of Michigan survey that found Americans under the age of 35 have curtailed spending as compared to their older counterparts. That could be due to lackluster job prospects, student loan debt and prolonging of marriage. To spur spending on the part of young adults, policies such as student loan forgiveness are being debated to help with debt, noted Bloomberg.