Already in debt, Generation D covets mortgages, parenthood
True or false: When young adults sink deep into debt, they delay
marriage, parenthood and homeownership.
The answer appears to be false. Despite record levels of debt,
young people plunge ahead with these life-changing events that may
drive them even deeper in debt.
Two studies have arrived at that conclusion. One report was paid
for by the federal government and the other by Nellie Mae, a nonprofit
provider of student loans. Researchers interviewed college graduates
about their debts, especially student loan debt.
"There didn't really seem to be differences
between people who had borrowed and people who hadn't borrowed,"
says Susan Choy, who wrote a report in 2000 for the U.S. Department
of Education. The report, "Debt Burden Four Years After College,"
was the result of a survey in 1997 of people who had graduated from
college during the 1992-93 academic year.
The report concluded that people who had taken out student loans
were just as likely to buy a house or condo within four years of
graduation as people who had never taken out student loans. The
level of their debt had no bearing on whether they bought a home.
And four years after graduation, student loan borrowers were slightly
more likely to have married (52 percent) than people who had not
taken out student loans (50 percent). Student loan borrowers were
slightly more likely to own a car and just as likely to have saved
money for some purpose as their non-borrowing friends.
The Nellie Mae study arrived at a similar conclusion, but with
a twist: The graduates who were surveyed exaggerated the effects
of their debt.
Pay attention to what they do
Researchers for the Nellie Mae study asked college graduates how
debt affected major decisions: Had student loan debt caused them
to delay buying a house? Getting married? Having children? Buying
Many said yes. But then the researchers looked at what the graduates
"Their behavior doesn't necessarily mirror
what they're saying," says Diane Saunders, who co-wrote the
report, called "Life After Debt: Results of the National Student
The report was published in 1998 based on surveys of college graduates
in 1997. Nellie Mae conducted similar surveys in 1987 and 1991.
Nellie Mae asked in 1991 and in 1997 if debt had caused college
graduates to delay buying a house. In 1991, 25 percent said yes;
in 1997, 40 percent said yes. But, just as Choy found, borrowers
and nonborrowers were equally as likely to own their homes.
Saunders says: "What I think is most important there is to
look at the increase over time in the number of people who say they're
burdened by student loans. I think even psychologically this is
But significant of what, exactly? No one knows. It seems that
borrowers might feel more stressed out nowadays, but it's tough
to find out how that affects behavior.
Although debt didn't seem to affect homeownership, other factors
did: People are more likely to own houses as they get older, get
married and have children.
There was one exception: Choy found that people
who had taken out student loans to go to graduate school were less
likely to own a home. She believes that's because some of these
people were still in grad school and not earning enough to buy a