The fact is the vast majority of those who have taken out student loans are making their payments on time and have landed the kind of job they sought in the first place.  This doesn’t reduce the impact of those who are struggling as one in ten student loan borrower is at least 90 days behind in their payments. Only about 5% of all the borrowers owe more than $100,000 but this group makes up almost a third of all the outstanding debt. The average debt load coming out of college is around $34,000.  The majority of those who have racked up the big debts are those who attended medical school, law school or some other professional school and they are most likely able to get the kind of jobs that will allow them to pay off that loan.


There are at least two reasons that student debt has captured the attention of so many. The first is that delinquency rates are far higher than they are for any other kind of loan – car loans, mortgages and credit cards included. This stems from the fact that it is harder to collect on this debt as there is nothing to seize and the fact the debt is largely owed to the government and there has not been an aggressive attempt to collect. Many of those who borrowed expected this investment to set them up for a great job and when that was not the case they quickly fell behind as they tried to handle their other obligations.

The second important point is that this is a key part of the economy – the educated person is supposed to be the backbone of the economy. They are supposed to be the people who buy homes and start families and otherwise consume. The evidence is strong that student loan debt is hampering the ability to qualify for a mortgage and further hampers the ability to come up with the requisite down payment and the subsequent monthly mortgage payments. It is not altogether clear that student loan debt is the major factor as far as millennial home ownership rates although it is certainly a consideration. The millennial home buyer is still not manifesting until they are in their 30s as there remains a preference for apartment living and the flexibility that provides. This is a generation that is not yet willing to settle into that lifetime job and it is a generation that is less attracted to accumulation of tangible goods. They are simply not as likely to need a bigger home and will be content with smaller spaces. That means less interest in the single family home and the attendant yard work.

Courtesy Dr. Chris Kuehl, ARMADA Corporate Intelligence