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Kim Butler

Partners for Prosperity, Inc.

City:Mt. Enterprise

State: TX

I have 20+ years of handling alternative investments in cash, growth and income for clients nationwide.  I strive to help my clients with all things financial in every way possible over the phone and the web.  I own an alpaca farm which I enjoy working during my downtime.  I also enjoy gardening, writing and reading books.  I also train other advisors on Prosperity Economics.

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Student Debt Weighing on Young Americans

Households headed by young adults owing student debt “lag far behind their peers in terms of wealth accumulation,” new report finds.

| BY Donald Liebenson

The burden of student debt has far reaching wealth creation implications on young households trying to gain a financial foothold, a recent Pew Research survey finds.

Households headed by young adults owing student debt “lag far behind their peers in terms of wealth accumulation,” the new analysis of government data finds. About four-in-ten U.S. households (37 percent) headed by an adult not yet 40 currently have some student debt—the highest share on record, with the median outstanding student debt load at about $13,000.

Roughly 37 million in the U.S. are saddled with $1 trillion in student debt.

The Pew study cites a finding in the most recent Survey of Consumer Finances that households headed by a young, college-educated adult without any student debt obligations have about seven times the typical net worth ($64,700) of households headed by their peers with student debt ($8,700).

There is also a formidable wealth gap between households headed by young adults with and without a bachelor’s degree: Those with no student debt have accumulated roughly nine times as much wealth as debtor households ($10,900 vs. $1,200). “This is true despite the fact that debtors and non-debtors have nearly identical household incomes in each group,” the report states.

Compounding the student debt woes of these young households are other types of debt, including car loans, a mortgage and credit card debt. Total indebtedness of student debtor households is almost twice that of similar households with no student debt ($137,010 vs> $73,250), Pew reports.

What factors may be leading those with student debt to carry more overall debt? Is the burden of student debt making it more difficult for young adults to gain financial traction in other areas of their lives? The Pew report suggests that it may also be the case that with the rising share of young adults currently enrolling in college, economic gaps between those who borrow for higher education and those who do not may be widening, which is negatively impacting a sense of economic well-being.

Those who took out loans to finance their college education are less satisfied overall with their personal financial situation than those who did not, Pew research finds. And while a bachelor’s degree does generally pay off in terms of better job opportunities and higher starting salaries, those who borrowed for college, too, are less likely to see an immediate pay off for their investment in their college education.

Related story: Interview with Liz Weston: "You don't want to overdose on student loan debt."

About the Author

Donald Liebenson

Donald Liebenson writes news and features for Millionaire Corner. He has been published in the Chicago Tribune, The Chicago Sun-Times, The Los Angeles Times, Fiscal Times, Entertainment Weekly, Huffington Post, and other outlets. He has also served as a marketing writer for Chicago-based Questar Entertainment and distributor Baker & Taylor.  

A graduate of the University of Southern California, he is married with a college-age son. He also writes extensively about entertainment.