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The End of Ownership?



For the first time in ten years, 30-year-olds with a history of student debt are less likely to buy homes and cars than their debtless counterparts. Or in other words, a college degree, while offering a potential career boost, may be holding the young back from acquiring other major markers of adulthood.

According to a study by the Federal Reserve Bank of New York:

Unsurprisingly, homeownership rates between 2003 and 2009 were significantly higher for thirty-year-olds with a history of student debt than for those without. Student debt holders have higher levels of education on average and, hence, higher incomes. These more educated consumers are more likely to buy homes.

However, this relationship changed dramatically during the recession. Homeownership rates fell across the board: thirty-year-olds with no history of student debt saw their homeownership rates decline by 5 percentage points. At the same time, homeownership rates among thirty-year-olds with a history of student debt fell by more than 10 percentage points. By 2012, the homeownership rate for student debtors was almost 2 percentage points lower than that of nonstudent debtors.

Car purchases mirrored this trend. Today, student borrowers are less likely to hold auto debt than non-borrowers. The study provides two reasons for this: young people might not be willing to take on further debt, or lenders may be less willing to offer loans to young people with plummeting credit scores.

The red flags have become increasingly obvious over the past few months. Student debt, held by 43 percent of Americans under 25, has topped $1 trillion, and nearly 30 percent of student loans are delinquent. This, along with a brutal job market and the impending burden of Medicare and Social Security, adds up to a dismal outlook for the young.

Once again, the boomers’ poor decisions are taking a toll on their children’s economic futures.

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  • Andrew Allison

    “Student debt holders have higher levels of education on average and, hence, higher incomes.” is highly speculative. What we may be seeing is the declining income of student debt holders as the market becomes flooded with them.

  • cubanbob

    As if this wasn’t easily foreseeable.

  • Jim Luebke

    Another useful trend to put on these graphs would be the disposable income of people in these groups.

    Money going to loan payments is money that isn’t going to iPads. The usefulness of a college degree to a government’s tax revenue base is declining rapidly.

    The Ivory Tower is getting more and more glittering all the time, with life after university (and outside university in general) getting bleaker and bleaker.

    Someone’s going to nail something to a church door soon — or post it on Twitter, YouTube, or Facebook — that’s going to set the old order ablaze.

    • Andrew Allison

      I believe the WRM is doing his best to do so, hence my disappointment at the rah-rah infographic.

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