WASHINGTON, April 18 (Reuters) - Younger Americans are increasingly struggling with the burden of student loan debt, and appear to be retreating from homeownership and car debt, according to a recently released study.
Historically the median age of first home purchases has been about 30 years old, and homeownership rates were significantly higher for 30-year-olds with a history of student debt.
That’s because this population tends to have higher levels of education and higher income.
But the recession and the subsequent surge in student loan debt delinquencies appear to have flipped this trend, according to a study by Meta Brown, a senior economist in the Federal Reserve Bank of New York’s Research and Statistics Group, and Sydnee Caldwell, a senior research analyst in the same group.
By 2012, for the first time in at least a decade, 30-year-olds with no student loan history are more likely to have home-secured debt, the study found.
It found a similar trend with auto debt.
Total student loan balances have tripled in the last eight years as more people borrow to meet the increasing cost of attaining higher education.
According to the New York Fed data, 43 percent of American 25-year-olds had student loan debt in 2012, up from 25 percent in 2003. Americans now owe about $1 trillion in student loan debt.
Delinquency rates have also surged, as the lingering effects of the recession have made it difficult for new graduates to find jobs. The New York Fed recently said about 6.7 million borrowers - out of a total 37 million - are at least 90 days delinquent.
A number of education policy experts, consumer groups and lawmakers have said urgent action is needed to overhaul the student loan market and reduce the burden on borrowers.
The Consumer Financial Protection Bureau, which has taken broad interest in student loans, is in the process of compiling information on how student loan burdens might impact the rest of the economy and affect access to mortgage credit and automobile loans.
“Consensus is growing about the potential student debt domino effect on the economy,” CFPB student loan ombudsman Rohit Chopra said via email. “When borrowers struggle to meet their student debt obligations, there are implications for all of us.”