The kind of debt consumers take on is changing.
And the changes look very different by age, according to a TransUnion report released Wednesday that looks at the shifting make up of consumer debt loads over time. Not surprisingly, younger consumers are seeing student loans crowd out most other types of loans, says Charlie Wise, vice president in TransUnion’s Innovative Solutions Group.
For instance, student loans accounted for 36.8 percent of the total debt load for consumers ages 20 to 29 in 2014, up from the 12.9 percent reported in 2005, the study showed. Meanwhile, the share of debt due to mortgages shrank over that time period, to 42.9 percent in 2014 from 63.2 percent in 2005, as the number of young people buying homes declined. The share of debt loads from auto loans increased, to 14.1 percent from 11.6 percent in 2005.
At the other end of the age spectrum, consumers 60 and older saw their average debt loads increase for all types of loans — including student loans — likely because of their strong credit histories, Wise says.
While it is still rare for older consumers to have student loan debt — less than 5 percent of consumers in that age group have school loans, according to the report — those who did saw their average debt load grow to $27,168 in 2014 from $14,696 in 2005, similar to the average amount owed by younger consumers. (The average student loan balance for all consumers grew to $29,575 in 2014 from $17,442 in 2005.)
People in their 60s may be helping out family members with weaker credit scores, Wise says. A chunk of those loans, 42 percent, was due to older consumers co-signing on loans to help another borrower qualify, he says. But the majority of that debt is for loans taken out by a person in his 60s, either for his own education or to pay for college for a relative, he says.
A separate report released by the Pew Research Center on Tuesday found that the biggest increase in student loan borrowing over the past 20 years happened among affluent families. Middle- to high-income families saw the biggest jump in the share of college graduates who borrowed to pay for school.
Sixty two percent of 2012 graduates from upper-middle-income households left college with loans, up from 34 percent about 20 years ago, the study found. Low-income graduates were still the most likely to leave school with loans, with 77 percent of students graduating with debt in 2012, up from 67 percent in 1993.
Researchers said the strong increase in borrowing among the affluent may be partially due to changes that expanded the availability of student loans for well-off students. Before the 1990s, federal Stafford loans were offered only to undergraduate students who needed financial help. But once unsubsidized Stafford loans were introduced, federal loans became available to all undergraduate students regardless of their financial need, the report notes.
Some higher-income families may have also increased their borrowing after seeing their wealth damaged during the financial crisis. Some of the other sources families may have relied on before the recession, such as a home equity line of credit, may not have been as easy to access after the crisis, says Richard Fry, a senior economist with the Pew Research Center and author of the report.
Families on the lower end of the income scale may have kept borrowing levels stable by turning to less expensive universities or taking advantage of need-based grants and scholarships, he says.