Quick Takeaways:

• A majority of young adults with college degrees are in “good” or “excellent” financial health, with higher rates of employment, earnings, and credit.
• Seven in 10 young adults with a bachelor’s degree are employed in a job related to their field of study, and tend to earn about $22,500 more per year than young adults without a degree.
• When it comes to borrowing student loans to pay for college, the study reaffirms that non-completers face greater financial challenges and trouble repaying their debts than those who complete their education.

By Brittany Hackett, Communications Staff

Young adults with college degrees are in better financial health and more likely to be employed and earning higher wages than those who start college but do not complete or those who do not attend college at all, according to a new study from Navient.

The study, Money Under 35, is based on a sample of 3,069 young Americans aged 22 to 35, examining how their financial health is faring the current economy. According to the data, young adults view themselves as more financially healthy in 2016 than in 2015, with a larger number reporting that they are employed full-time. Eighty-five percent of young adults are in “good” or “excellent” financial health this year according to an index used by Navient, with a 25 percent increase in those with “excellent” health since 2015.

While young adults overall are viewed as financially healthy, those with college degrees or higher continue to be in better financial health, with higher rates of employment, earnings, credit scores, and homeownership. According to the study, seven in 10 young adults with a bachelor’s degree are employed in a job related to their field of study, and tend to earn about $22,500 more per year than young adults without a degree. Associate degree holders earn about $7,500 more than those without a degree, and young adults with advanced degrees earn about $55,000 more.

An associate degree “appears to be the breaking point for improving financial health,” as young adults with a two-year degree are more likely to have an excellent financial health index score than those who attended some college but did not complete, 25 percent and 17 percent, respectively, according to Navient. Young adults with bachelor’s and advanced degrees are even more likely to score “excellent” on the financial health index, 29 percent and 51 percent respectively.

Non-completers are most likely to have poor financial health, even when compared to their peers who have a high school education or less. The median income for those who have some college education, but no degree, is $37,500, which is lower than all other education categories, including a high school education or less, which has median earnings of $42,500. Associate degree holders earn an average of $47,500, bachelor’s degree holders earn an average of $62,500, and advanced degree holders earn an average of $95,000.

Financial difficulties and personal life changes are the most commonly cited reasons young adults did not complete their college degrees—at 45 percent and 42 percent, respectively—and 48 percent plan to return to school in the future, with an additional 31 percent considering it.

When it comes to borrowing student loans to pay for college, the Navient study reaffirms that non-completers face greater financial challenges and trouble repaying their debts than those who complete their education. According to the study, 60 percent of young adults who attended college took out student loans, with half owing $10,000 or less and 36 percent owing $5,000 or less.

While only 35 percent of young adults who borrowed to pay for college have paid off their debt, the percentage jumps to 46 percent among young adults between ages 31 and 35 who borrowed and graduated. Among those who did not complete, 60 percent said they experience trouble meeting their monthly repayment obligations.

Other notable findings of the report include:

• Non-completers are more likely to report low credit scores than all other education levels, including those with a high school education or less;
• College degree holders are more likely to own a home or have a mortgage, particularly among young adults ages 31 to 35, regardless of whether they have student loan debt or not;
• While a majority of young adults report that they are putting money aside for savings, only 30 percent said they were saving for retirement, instead focusing their savings goals on short-term items like an emergency fund or a car;
• Young adults continue to face a gender gap in pay at all levels of educational attainment, with men who work full-time earning an average income $30,000 higher than women, according to self-reported data; and
• Young women also are less confident about their financial wellness than men, with only 26 percent of women rating their wellness highly compared to 50 percent of men.

Publication Date: 10/21/2016

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