A Generation Indebted: Young Adult Debt across Three Cohorts

In this study, I examine how young adult indebtedness has changed across three cohorts of young adults in the 1970s, 1980s, and 2000s. I pool data from four National Longitudinal Surveys of Youth cohorts—the NLS-M 1966, NLS-W 1968, NLSY 1979, and NLSY 1997. I have three key findings. First, debt burdens (debt relative to economic resources) have increased substantially across the three cohorts of study. Despite the fact that the most recent cohort of young adults are earlier along in their debt accrual career and have yet to hit many of the major adult milestones that often lead to debt, they are burdened with more debt than previous cohorts of young adults who achieved these milestones earlier. Second, young adult debt portfolios have shifted towards noncollateralized (unsecured) and student loan debt over time, the latter replacing home mortgage debt as the primary form of wealth-building debt among young adults. Third, cohort changes in debt have occurred unequally across social class lines. Young adults from lower social class backgrounds have disproportionately taken on more unsecured debt over time, relative to their more advantaged counterparts. The growth in debt burden across cohorts, however, has been most pronounced among college-educated young adults.