The 2012–13 MacroMonitor identifies roughly 15 million households with self-reported student-loan debt; it excludes dormitory residents, because these individuals do not represent a household. The 2012–13 study does not distinguish between private and federal student loans; the 2014–15 survey will identify the loan source. Government agencies report the number of individuals with student-loan debt using a nationally representative sample from Equifax.

In 2012, the Chronicle of Higher Education reports that 20 million individuals attend college each year; 60% take out student loans to do so. The Federal Reserve Bank of New York reports a total of 37 million student-loan borrowers in first-quarter 2012 with a total debt of about $900 billion. The Consumer Finance Protection Bureau reports $1 trillion in student-loan debt—$864 billion in federal-backed loans and $150 billion in private student loans. All debt numbers highlight the magnitude of drag student loans are having on the US economy.

Demographics

Four in five household heads with self-reported student-loan debt are Millennials (46%) or Gen Xers (33%). The remaining 21% are older generations: Boomers and Silent and Greatest Generations—presumably parents and grandparents of students. Households with student-loan debt:

• Have a mean age of 40 for the household head.
• Have a mean annual household income of $83K, in comparison with $69K for all US households; one-third earn less than $50K annually. Only one-quarter qualify at the low or low-middle socioeconomic level.
• Slightly more than half have heads with a four-year or postgraduate degree; one-third have some college but no degree; 13% have a high-school diploma or less.
• The majority (59%) are married; 18% are single—on average with all US households (17%).
• About half (52%) have dependent children—children supported by the household. However, they are average for having Boomerang Kids (11%).
• The majority (90%) of household heads are employed.

Financials

Because the majority of households with student-loan debt are younger than average, even among households with middle-class incomes, many are funding wants and needs with credit. In aggregate they:

• Have lower-than-average mean balances for all types of assets but almost twice the total liabilities of all households—$170K for households with student-loan debt, in comparison with $90K for all households.
• Have higher-than-average incidences for owning savings accounts; US Savings Bonds; custodial accounts; 529 plans, 401(k), 403(b), or 457 plans; and nontraded stocks but have lower-than-average mean balances in these accounts.
• Have higher-than-average vehicle and consumer loans and credit-card balances. The mean amount in credit-card balances is $7K, in comparison with $5K for all households. They are above average for mortgage and credit insurance.
• Own—only 42% (average)—an investment account. Of households with an investment account, over half have $10K or less in the account. Mean amounts in all savings and investment accounts are significantly below average.
• Have above-average ownership of life, health, and health-related insurance—which is in group policies provided by employers.

Financial Attitudes and Interesting Tidbits

The majority of households with student-loan debt are fairly undisciplined about spending and savings decisions; over one-third have spent more than they wanted because of easy credit. Only one in five say they do a good job of keeping their financial affairs in order. Higher-than-average mean numbers of institutions (8.4), mean numbers of products (21), and estimated annual financial transactions (898) signal high involvement in their finances but not necessarily a high degree of engagement—they are twice as likely as all households to prefer direct and electronic methods of dealing with providers. Half use a consumer-finance company, 40% a vehicle-finance company, and 69% an "other finance or credit company." One in five consider a consumer-finance company to be their primary institution.

• Roughly twice as many (64%) access accounts via online and mobile devices as all households (33%) do.
• Only 11% of households are satisfied with their current financial situation: 53% are financially stable right now; 32% struggle to make ends meet.
• Four in five households would pay off some debts with a windfall of $25 000.

Implications

On the basis of income, almost half of households with student-loan debt (45%) should be able to meet their loan obligations. Whether these households can meet loan payments and save for the future at the same time is less certain. Most are aware they are not saving enough; two in five households are afraid they are not saving enough for future needs. The good news for financial-services providers is that many student-loan households recognize the need for financial information and advice. They express interest in learning more about a wide array of topics such as how to budget better, how much life insurance is right, how to minimize income taxes, and how to choose investments. However, few (9%) enjoy learning about investment opportunities or consult a specialist when making financial decisions. These households rely heavily on friends, family, and the internet—not financial institutions—for information and advice. Many younger households are frustrated by lower-than-expected starting salaries and stagnant wages, the relentless effort to manage finances, dim prospects for moving on with life in the near future, and the lifelong effects of the financial crisis. As a result, not only are many younger households disengaged and risk averse, they also are cynical and distrustful of the financial community. For example, only 12% believe their financial institutions have their best interest in mind when offering them products and services. Before financial-services providers can hope to win this next generation of customers, they must establish trust. One method to do so is to offer products and services with both real and perceived benefits.

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