Student Loan Borrowers Less Likely to Own a Home, Have Equity-Generating Debt

By Owen Daugherty, NASFAA Staff Reporter

Borrowers who hold student loan debt are more likely to have non-equity-generating debts such as credit card and medical debt, creating additional burdens to wealth building, according to a new working paper from the U.S. Census Bureau.

Using recent survey data, researchers from the Census Bureau charted links between student loan debt and what other forms of debt borrowers were likely to have.

The working paper broke down debt into two forms: equity-generating debt such as mortgages, business loans, or vehicle loans; and non-equity-generating debt, which includes things like credit card and medical debt.

Notably, those with student loan debt generally had less equity-generating debt and more non-equity-generating debt, while the opposite was true for those without student loan debt.

The findings underscore the impact that student loan debt can have on a borrower's life, as student debt holders often have higher debt-to-income ratios and therefore may have less access to home or auto loans, or may be offered those types of loans with less favorable terms.

When it comes to non-equity-generating debts, the amount varied greatly for borrowers with student loan debt based on the level of education they had attained. Those with student loan debt and no college degree or an associate degree held about $7,000 of non-equity-generating debt on average, according to the paper. Those without student loan debt and no degree or an associate degree had about $4,000 of non-equity-generating debt on average. 

As levels of education attainment increased, the gap in non-equity-generating debt between those with and without student loan debt narrowed. For example, those with an advanced degree beyond a bachelor’s, both with and without student loan debt, had roughly $5,000 in non-equity-generating debt, the smallest margin of any of the groups.

Borrowers with student loan debt may have a more difficult time paying off non-equity-generating debts, considering those debts often arise from circumstances beyond an individual’s control, the paper noted. 


Publication Date: 4/19/2022

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