Young Americans’ debt tops $1 trillion as student loans pile up

Students pull a ball-and-chain prop, representing student debt, at Washington University in St. Louis in 2016.
(Paul J. Richards / AFP/Getty Images )

More than a decade has passed since the youngest American adults 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 released Friday. Younger adults — those under age 35 — are spending less than previous generations, possibly because of weakened job prospects, delayed marriage and educational debt.


Policymakers 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.

Student loans make up the majority of the $1.005 trillion owed by this cohort, followed by mortgage debt. New mortgages among young adults today remain quite a bit below levels incurred in the early 2000s. This may suggest that adults are waiting longer to buy homes and may opt to rent longer than previous generations.

Mortgage debt makes up the vast majority of overall consumer debt, but it’s not growing nearly as fast as student loan debt. Since 2009, mortgage debt increased 3.2% while student loan debt grew 102%.

Student loans are the second-largest consumer debt segment and surpassed home equity revolving debt, auto loans and credit card debt balances shortly after the recession ended.

At the end of last year, auto loans were the third-largest portion of debt composition in the United States, followed by credit card debt.

Overall, consumer debt reached a record $13.5 trillion. Americans tend to experience their peak debt during midlife years, and debt should decline as individuals age.


A more striking piece of data: The implied debt that is at least 90 days delinquent for student loans dwarfs other loan type categories.

Once a person is the subject of third-party collections because of student loan delinquencies, his or her credit profile will be hindered for years. Missing a student loan payment can also harm a person’s chances of getting a mortgage. The implied debt in arrears from student loans represents about 40% of the total debt balance that is 90-plus days delinquent.