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The financial impact of student loans
By May Luong
In the past 20 years, average university tuition fees have more than doubled. At the same time, the proportion of postsecondary graduates with student loan debt and the average amount of their debt increased modestly. However, a small but rapidly growing proportion was carrying a high debt load at graduation, generating interest in the longer-term financial situation of student loan borrowers.
Among postsecondary graduates age 20 to 45, student loan borrowers were less likely to have savings or investments compared to non-borrowers. A statistical model that accounts for personal and job characteristics estimated that 42% of borrowers and 52% of non-borrowers held savings or investments.
Similarly, the likelihood of owning a home among postsecondary graduates was also lower for borrowers compared to non-borrowers: 53% and 60% respectively.
Among graduates age 20 to 29, student loan borrowers have, on average, lower assets and correspondingly lower net worth than non-borrowers. Total debt was similar for borrowers and non-borrowers with postsecondary education.
Student loan borrowers and non-borrowers who completed their postsecondary education did not differ significantly in terms of employment rates, total personal income and likelihood of having a retirement pension plan.
