Not surpisingly, student loans make up a majority of the debt for 19-29 year olds. Reflective of this is that while mortgage debt is only up 3.2%, student loans are up a staggering 102%.
Alexandre Tanzi, writing for Bloomberg:
More than a decade has passed since young Americans faced debt levels this high.
Debt among 19 to 29-year-old Americans exceeded $1 trillion at the end of 2018, according to the New York Federal Reserve Consumer Credit Panel. That’s the highest debt exposure for the youngest adult group since late 2007.
Debt levels play a role in how young adults view their spending conditions, according to a University of Michigan survey Friday. Younger adults -- those under age 35 -- have reduced their spending compared with previous generations possibly because of weakened job prospects, delayed marriage and educational debt.
Policy makers have recognized that lower spending limits economic growth. As a result, a number of policies to boost younger adults spending such as forgiving student debt have entered the political arena, according to Richard Curtin, director of the University of Michigan consumer survey.
Impacts Down The Road
Student loans have moved ahead of home equity revolving debt, auto loans and credit card debt balances not too long after the recession ended. Alone, overall consumer debt in the U.S. reached $13.5 trillion. So it really shouldn’t be surprising at this point that so many Americans have more credit card debt than emergency savings.
You can’t help but wonder though where our economy would be at, if instead of being $13.5 trillion in debt, if consumers had been instead able to spend that money, or better yet, save it, and to not borrow from their future.