Young Americans Owe $1 Trillion in Debt, Not Just Student Loans

Facebook icon Twitter icon Print icon Email icon

By Brian O'Connell

March 12, 2019

A new report from the Federal Reserve Bank of New York states that the U.S. 18-to-29-year-old demographic owes a total of $1 trillion in debt, as of December 31, 2018. Student loans represent the largest category of debt, at more than a third of the total.

That’s the highest level of total debt for this demographic since 2007 – just before the Great Recession nearly capsized the U.S. economy.

Overall, the report, which is based on a sample of credit bureau data using the New York Fed’s Consumer Credit Panel, shows that outstanding student loan debt stood at $1.46 trillion in the fourth quarter, up $15 billion from the previous reporting period.

The New York Fed’s figures for total student loan debt outstanding underestimate the actual total because the age distribution of the consumer credit panel is older than typical student loan borrowers.

Additionally, 11.4% of aggregate student debt was is a serious delinquency (90 or more days delinquent) or in default in the fourth quarter of 2018, representing “a small improvement from the jump seen in the third quarter of 2018,” according to the report.

An Alarming Trend

But it’s the under 30-crowd that should ring the alarm bell – for that demographic, for colleges and universities, for the business sector, and for Uncle Sam. The federal government, in particular, needs to groom younger Americans to buy the houses and make the capital investments that ensure economic growth for the nation’s future, especially after the baby boomers are out of the workforce.

That can’t happen, however, with America’s millennials mired in debt at a time when they should be starting to get better jobs, earn better incomes, and start buying new homes and autos. Instead, they’re largely focused on getting out of debt.

These figures from the New York Fed’s study tell the tale:

Sources of Debt

Amount of Debt

Percent of Total Debt

Student Loan Debt

$379 billion



$363 billion


Auto Loans

$167 billion


Credit Cards

$59 billion


Revolving Debt

$33 billion


According to the New York Fed’s report, Millennials owe about a quarter of the $1.46 trillion in total outstanding student loan debt.

Five Takeaways from the New York Federal Reserve Report

The skyrocketing amount of debt owed by younger Americans is likely to have a highly-negative impact on the 18-to-29 demographic for years to come, and student loan debt is the primary problem.

Let’s take a deeper dive into five potential takeaways that signify just how harsh the debt problem is on young American adults, and how that debt generates a ripple effect across the U.S. economy for years to come:

Student loan debt rates are growing astronomically. According to the New York Fed Reserve report, U.S. student loan debt has doubled since 2009. That’s far and away the highest rate of growth for any form of consumer debt in the U.S.

Comparatively, mortgage debt rate growth clocks in at just 3.2%.

Millennials are not spending like previous generations. Saddled with loads of student loan debt, younger Americans just aren’t spending like their parents, grandparents, and great grandparents. And that’s a big problem for the U.S. economy.

According to the most recent University of Michigan Surveys of Consumers, the tide has turned on historical U.S. demographic spending patterns. “Traditionally, younger age groups voiced the most favorable views of buying conditions for all types of discretionary purchases,” the survey states. “The differences were comparatively small, but consistent over many decades.”

But that pattern has been turned on its ear with this generation of 20-somethings.

“Consumers under age 35 had viewed buying conditions more favorably for most of the past half century, but in the past decade, younger consumers viewed them less favorably than other age groups,” the survey reports. “The gap is widest for homes, followed by vehicles, and smallest for purchases of large household durable goods.”

Student loan forgiveness programs will grab the spotlight. With student loan borrowers – and their anxious parents – clamoring for solutions to their family’s mounting college loan debt problems, expect federal and state governments to take a closer look at loan forgiveness programs, likely at taxpayer expense.

Currently, 99.5% of people who applied for public service loan forgiveness have been rejected, according to the U.S. Department of Education.

Look for that trend to change, too. Uncle Sam’s primary vehicle for student loan forgiveness – Public Service Loan Forgiveness – is expected to green-light more student loan relief as more borrowers satisfy the requirements for loan forgiveness, such as having made the required number of qualifying payments.

Employers will jump in and help with student loan debt relief. U.S companies are already helping employees save for college via 529 savings plans. Every dollar saved is a dollar less borrowed.

Now, with Millennials comprising 75% of the U.S. labor force by 2025, expect younger career professionals to leverage that negotiating power, and demand direct help with the repayment of their student loans.

Only 4% of U.S. companies currently offer student loan payment help to their staff, according to SHRM, but that should grow, especially if Congress passes legislation to exclude student loan repayment assistance from income.

Expect income-driven loan repayment programs to flourish. With so many Millennials mired in crippling student loan debt, expect participation in income-driven student loan repayment plans to grow.

So-called IDR plans provide student loan borrowers with a more lenient and affordable loan payback level on student loan repayments. In a word, IDR programs base the student loan payments on the borrower’s ability to pay – the borrower’s discretionary income – instead of the amount owed.

That could provide relief for borrowers, and the federal government will still get its money back. That’s a win-win for the federal government.

A good place to start:

See the best 529 plans, personalized for you