Student Borrowers Have Higher Overall Debt, But Why?

Young households with student debt also have more overall debt.
Young households with student debt also have more overall debt.
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A study released by the Pew Research Center shows that young households carrying student debt also carry more overall debt than similarly-educated homes without that burden.

To which we can all say: “Duh.”

That student borrowers carry more debt overall than their non-debt-carrying peers is far from surprising.

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Student loan borrowers are more likely to take on vehicle and credit card debts as well, the study found. In other words, it’s not as simple as assuming student debtors have the same debt level as everybody else, and the addition of their student obligations puts them further in the hole.

The typical college educated household with student debt holds about $137,010 of total debt, compared to $73,250 for those without student debt.

The increased overall debt held by those who owe on student loans could be a result of student debt burdens making it more difficult to find their financial footing. Because student loan payments result in borrowers having less cash on hand, they might be compelled to take on credit card debt in order to keep up. Pew alternatively theorizes that with more people attending college overall, the economic gap between those who borrow and those who don’t might be growing.

Pew doesn’t mention this, but it could also be that those who already carry debt are more inclined to take on more—especially if existing debt makes them feel like there’s not much to lose by doing so.

The study compared similarly-educated households. So, college educated young folks—defined as those under 40—who carried no student debt were compared to fellow grads that did. It featured a separate comparison of those who had not completed a bachelor’s degree, separating those groups by those who did and did not carry any student debt. In both cases, households with the student burden had more total debt and a lower net worth.

That’s not to say going into debt for a degree isn’t worth it. The study emphasizes that those who complete a degree earn significantly more. And another recent study from the Federal Reserve showed a degree’s worth to be about $800,000 over time, even accounting for tuition costs.

Again, nothing shocking here. But as student debt continues to heat up as a national economic issue, it doesn’t hurt to look at all relevant data points.