Adults under
35 have more student loan debt and less exposure to credit card, car, and home
loans. That's a troubling sign for the
economy.
Jobless
college grads unable to pay down their student loans now wonder if their
degrees are really worth it. And as Europe grapples with its own debt problems,
Washington lawmakers struggle to find a way to reduce the U.S. deficit.
But debt isn't always a bad thing. More of it can reflect a healthy
economy. This is because consumers and lenders feel comfortable taking on more
risks.
The Federal
Reserve's policies to keep interest rates super low has spurred more home and
car sales by getting consumers to borrow more, but it appears young adults have
benefitted less from the central bank's bond-buying program.
Home ownership
of young adults has fallen greatly and
young people are less willing to take on credit card debt and auto loans,
suggesting they aren't in financial positions to commit to monthly payments.
Compared with
50% in 2001, only 39% of young households in 2010 had credit card debt. When it
comes to vehicles, 73% of households headed by an adult younger than 25 years
old in 2001 owned or leased at least one vehicle. By 2011, that share fell to
66%.
In a recent
survey at Rutgers University 40% said student debt was making them delay
large-scale purchases, such as a house or a car.
Faced with big
monthly payments, recent college graduates aren't earning as much as graduates
before them. The median salary for those
graduating between 2009 and 2011 was $27,000 -- $3,000 less than 2007.
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