Diverging Paths: Youth Debt, College and Family Background

New NEFE-funded research investigates financial inequality and insecurity among Americans from age 20 to 30, focusing on individual and household education attainment and the types of debt held. Student loan debt was examined along with secured and unsecured consumer debt to illustrate the broader financial risk experienced by young adults with education ranging from high school diplomas to graduate degrees. The study, conducted by The Ohio State University, suggests that while debt does not always become an unbearable burden, it makes young adults more vulnerable to financial problems when troubles do arise.

Community college attendees are at the forefront of this vulnerability. On average they are more likely to start school later and stay in school longer despite a shorter overall degree program—only 39 percent have earned a two-year degree within six years of starting. Furthermore, individuals who obtain associate’s degrees carry differing portfolios of debt and experience the greatest financial burdens, relative both to bachelor’s degree holders and individuals who never enrolled in college.

When compared to other degree holders, those with associate’s degrees:

  • Have more exposure to vehicle and credit card debt and a higher rate of loan delinquency

  • Are more likely to pay higher interest rates on student loans

  • Were hardest hit during the Great Recession

  • Are more likely to have experienced other major life events, such as marriage and childbearing, during the same period that they are pursing education credentials

Most data and assumptions about college focus on bachelor’s degrees, but these are not universally translatable to two-year degree pursuers. Understanding their unique challenges forces the field to treat them as a distinct group rather than lumping them in with traditional four-year students.

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