Student Loans Replacing Mortgages in Young Americans' Debt Profiles

Student loans have always made up a significant portion of Americans’ debt, but the surge in education loan balances in the past several years may be overpowering people’s ability to take out other loans they may want or need.

A new study from TransUnion analyzed the makeup of consumers’ debt loads from March 2005 and to March 2014, and among all age groups, student loan balances surged ahead those of auto loans, credit cards and personal loans. In 2005, student loan balances accounted for less of overall debt than each of those products.

The shift was particularly noticeable among young consumers. In 2005, student loans made up 12.9% of 20- to 29-year-olds’ debt, but that jumped to 36.8% as of 2014. Mortgage balances absorbed the bulk of that spike: They shrank from 63.2% of young consumers’ debt to 42.9%. Credit cards also accounted for less of total debt, dropping from 5.1% to 3.8%.

Student loans haven’t necessarily caused the drop in home loan balances — there have been plenty of things going on with the housing market and economy that likely contributed to the fall — but this isn’t the first time experts have drawn lines between high levels of student debt and low levels of homeownership.

“Our study clearly shows that the rapid rise in student loan debt for younger consumers has occurred while the shares of all other loan types except auto dropped, indicating that student loans may be crowding out most other loan types,” said Charlie Wise, vice president in TransUnion’s Innovative Solutions Group, in a news release about the data. “Additionally, younger consumers have found during and soon after the recession that it is more difficult to gain access to credit cards and mortgages, further pushing the decline in those balances.”

Parents, Grandparents Also on the Hook

Young consumers aren’t the only ones bearing the rising expenses of higher education. Student loans increased from 2.8% to 7% of debt for all consumers, and those older than 60 years saw their share of education debt rise from 0.5% to 1.8% in the nine-year period. That’s likely a result of rising education costs and students asking their parents and grandparents to co-sign the loans they need to pay for college.

Student loans aside, the older group of consumers seems to have enjoyed the credit access that comes with a good credit standing: Mortgage and home equity lines of credit balances increased in that age group, 87% of whom have a prime credit score, the TransUnion data show.

The credit score information in the study indicates credit improvement with age. On the VantageScore 2.0 scale, 49% of 20- to 29-year-olds have a prime score, as do 59% of 30- to 39-year olds and, 65% of 40-to 49-year-olds and 75% of 50- to 59-year-olds. The average age of your credit accounts, not biological age, has a small impact on your credit standing, but other factors are much more important, like making loan payments on time and keeping your debt levels low. To see where you stand, you can get two of your credit scores for free with updates every 30 days on

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Christine DiGangi covers personal finance for Previously, she managed communications for the Society of Professional Journalists, served as a copy editor of The New York Times News Service and worked as a reporter for the Oregonian and the News & Record. More by Christine DiGangi