Study: College Debt by Degree

Lawndale News Chicago's Bilingual Newspaper - Education

Lawndale News Chicago's Bilingual Newspaper - Education

Early-career Millennials face a host of financial challenges. Lack of affordable housing, student loan debt burdens and inadequate savings are common issues. While it is convenient to think of this generation as having a shared experience, research shows distinct differences between debt profiles of those with two-year versus four-year college degrees. The National Endowment for Financial Education® (NEFE®), in partnership with The Ohio State University (OSU), recently published a study examining types of debt held by individuals at age 30, uncovering several inequalities between two- and four-year degree holders that highlight just how divergent these two pathways can become. According to the study, financial precarity is broader than just student loans. In fact, the overall portfolio of debt holding likely contributes to the difficulty of managing student loan debt, especially in the early years before the returns to any degree come fully to fruition. The study captured and compared debt profiles of each type of degree holder at three points in time. From age 20 to 30, debt portfolios between degree pathways begin to diverge:

• Associate’s degree holders are more likely to have debt at age 20 than bachelor’s degree holders.

• By age 25, about one in five has a mortgage and at age 30, a greater proportion of bachelor’s degree holders have house debt.

• Vehicle and consumer debt are more common at every age for associate’s degree holders.

• Both types of individuals are likely to hold credit card debt at age 25. The proportion of bachelor’s degree holders with credit card debt drops steadily over time, while associate’s degree holders see only a slight decrease.

For more information or the complete study, visit www.nefe.org.

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