Since 2009, there’s been a 102% growth in student loans and just a 3% growth in mortgages for millennials
With the end of 2018 came yet another depressing new milestone for millennials: $1 trillion in total debt. That makes millennials the most debt-ridden young adult group since 2007, just before the Great Recession. But what’s truly alarming about this news isn’t the fact that millennials are carrying that much debt — it’s that so much of it is in student loans.
Millennials are the only generation for which student loans make up the majority of their debt. Every older generation has the majority of their debt tied up in mortgages. What’s more is that in the last decade, since 2009, mortgage debt among millennials has grown just 3 percent. But student loan debt? It’s more than doubled, with 102 percent growth in the same time period.
We all know there’s a student loan crisis. We’ve been reading about it for years, and while no one in the government can be arsed to act on it, students continue to be crushed under the ever-mounting cost of getting a basic education. But these numbers shine a light on a stark reality: Millennials are not buying homes because they are drowning in their student loan debt.
According to Bloomberg, new mortgages among young adults in 2019 are far below the levels of new mortgages among young adults in the early 2000s, before the housing bubble burst. Today, we see about 50 percent fewer new mortgages for people ages 19-29 than we did before 2007. And it’s no wonder — having a mountain of existing debt can make it harder to secure a home loan, and making hefty payments on school loans can severely impede a young person’s ability to save for a down payment. All of this checks out, yet still, no one with any political power is doing anything to meaningfully address it.
Yet another frightening new piece of this puzzle is that delinquencies on student loans are around 60 percent higher than for any other type of debt, including mortgages, auto loans and credit cards. That could also explain why home loan rates are growing so slowly among millennials, as just one missed payment on something like a student loan can result in years of difficulty securing a home loan.
It’s easy to think of this as just millennials’ problem, but the reality is these kinds of statistics should be very concerning to all Americans. The University of Michigan just released a study last week that shows how millennials’ spending habits compare to previous generations, and the result is that people under age 35 are spending less than the generations of young people who came before them. Lowered spending levels hinder the economic growth of the entire country, which means everyone suffers from things like stagnating wages and weakened job prospects because of millennials’ reduced spending.
There’s no easy fix to something as huge as the student loan crisis. But these numbers show it’s far past time for our policymakers to actually act. Young people are drowning in debt, and our entire country is suffering because of it.