Millennials blame student debt for delaying house and car purchases, but that might only be true for college dropouts.
“Student debt is indeed a barrier for a significant minority—college dropouts—but that it’s generally not holding back those who earned degrees,” Josh Mitchell wrote for The Wall Street Journal.
The research comes from Navient Corporation, a student loan servicer, and Ipsos, a private research firm, and sheds light on the divide between millennials who earn a college degree and those who enroll in college, but don’t complete their studies. The struggles of graduates are distinct from the struggles of dropouts.
Just as income levels increase with education levels, millennials who borrowed and earned a degree were more likely to have a mortgage, get married, and have children. Achievement mattered more than the debt level. Five- or six-figure debt loads can be shocking, but it’s manageable so long as the borrower’s income can keep pace. The aggregate amount of student debt, now more than $1 trillion nationally, obscures that basic financial truth.
For 25-to-30-year-old graduates who borrowed for college, 38 percent held a mortgage, outpacing graduates who still held student loan debt (35 percent), those with no college debt (30 percent), and those who did not borrow for college (22 percent). The average rate for 25-to-30-year-olds was 22 percent.
Similar patterns held for marriage rates and family-starting rates.
Low-debt levels for students tends to correlate with graduates who attended two-year colleges. They avoided debt, but are more likely to default. A four-year degree is more marketable to employers, and two-year degree holders get a smaller return on their investment.
The millennials who are worst off are dropouts. Dropouts who borrowed for college had lower mortgage rates than dropouts who didn’t borrow, were less likely to get married, and were less likely to have children. For dropouts who took on debt to pay for college, they would’ve been better off not borrowing, or possibly skipping their college attempt.
The data suggest that aiding college graduates with high debt loads shouldn’t be such a political priority. Graduates do better in the workforce, and they only comprise 34 percent of older millennials. Of greater concern are the college dropouts living on the economic margins and delaying milestones in life from college plans that didn’t work out.
