Young Americans are facing the highest debt levels in more than ten years, adding up to $1 trillion among 19 to 29-year-olds at the end of 2018.
That debt is the highest in the youngest adult group since 2007, according to the New York Federal Reserve Consumer Debt Panel.
The majority of that debt for these Millennials is student loans.
Fortune Magazine reported on the debt and explained how it is impacting spending habits of this demographic based on a University of Michigan survey released last week.
Younger adults— those under age 35—have reduced their spending compared with previous generations possibly because of weakened job prospects, delayed marriage, and educational debt.
Policy makers 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 $1,005,000,000,000 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.
Although mortgage debt represents the vast majority of overall consumer debt, student loan debt is growing at a faster pace, Fortune reported.
“Since 2009, mortgage debt increased 3.2 percent while student loan debt grew 102 percent,” Fortune reported.
Student loans debt has now surpassed home equity revolving debt, car loans, and credit card debt.
At the end of 2018 “auto loans were the third largest portion of debt composition in the U.S. followed by credit card debt. Overall consumer debt reached a record $13.5 trillion,” Fortune reported.
Another issue facing young Americans is those who become delinquent on student loan payments — the 90-plus days late for student loans is higher than any other loan category.
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