Student loan debt has simultaneously reduced younger consumers' ability to get a mortgage and burdened their older family members, a TransUnion study shows.
According to the 2014 TransUnion Consumer Wallet Study, the percentage of student loans in the total amount of debt owed by those aged 20-29 nearly tripled in the last nine years. (The consumer loan wallet consists of the total of mortgage, auto, card, home equity line of credit, student and all other loan type categories.)
Meanwhile, between 2005 and 2014, the biggest decline in the wallet share for these young consumers has been in mortgage loans, which fell to 42.9% in 2014, from 63.2% in 2005. The study also found that average mortgage balances per borrower dropped more than 9% from the high point of the recession in 2009 to $150,624 in 2014.
"Younger consumers have found during and soon after the recession that it is more difficult to gain access to credit cards and mortgages, further pushing the decline in those balances," said Charlie Wise, co-author of the study and vice president in TransUnion's innovative solutions group.
The average balance for borrowers with a student loan increased 61% from 2005 to $25,525 in 2014. Student loans represented 36.8% of their total loan balance in 2014, up from 21.1% in 2009, and 12.9% in 2005. At the same time the percentage of credit-active consumers aged 20-29 with a student loan also rose to nearly 51% in 2014, up from 31% in 2005. The wallet share and balances of auto loans also increased. The wallet share reached 14.1% in 2014, up from 11.6% in 2005, while the average auto loan balance for a borrower rose to $14,637 from $13,721.
The mortgage crisis and recession "has had a lasting impact" on consumers in their 20s and those ageD 60 or higher in very different but interrelated ways, Wise said. "While these groups differ greatly in their borrowing levels and wallet share compositions," their borrowing and wallet shares were likely impacted by each other. As unemployment rates remained high "for a prolonged period during the last six years, 20-somethings likely looked to their parents, grandparents, and other more financially established family and friends for financial support," he explained.
Transunion data show the impact of student loans was felt by all age groups. As of 2014 student loans consisted of 7% of the consumer wallet for all U.S. consumers ages 20 and over who had loans of any type, up from 2.8% in 2005. The average student loan balance per consumer with one or more student loan accounts also jumped to over $29,570 in 2014, up from roughly $17,440 in 2005.
While the average mortgage balance per borrower declined about 2% for the overall adult population between 2009 and 2014, consumers 60 years or older, have seen loan growth in every key lending category and are the only age group to see a rise in average mortgage balance, HELOCs and auto loans.
Older borrowers also have seen a rise in student loan debt similar to the one observed for the 20-29 age group. The average student loan debt per borrower with a student loan almost doubled to roughly $27,170 in 2014, up from nearly $14,700 in 2005, and 48% of these loans include a senior consumer as a co-signer.
"The increase in student loans by the 60-plus age group and the significant incidence of co-signed student loans points to the fact that many older Americans are participating in loans to help family and friends," Wise noted.
