Report Indicates Not All Student Loan News is Horrible

It’s not like student loan news is often uplifting, but the newest study on education debt released by Experian bears some encouraging data. The numbers reinforce concerns often voiced by borrowers, economists and politicians that the cost of higher education is growing at what is likely an unsustainable rate. However, the report also shows that the amount of debt students take on to get their degrees isn’t necessarily holding them back from other financial goals.

While every other major type of consumer debt has declined, student loans increased 84% during and after the recession (from 2008 to 2014), the Experian analysis found. Forty million consumers have at least one open student loan, but the average borrower has 3.7 loans, and the average monthly payment is $279 per consumer.

The analysis took a close look at young consumers, who are frequently the subject of concern among the student debt community (though education debt affects people of all ages and can follow debtors into retirement, jeopardizing their Social Security). Among consumers with credit histories ages 18 to 34, with and without student loans, 13.1% have a mortgage, and the average income is $34,000. People in that age group with student loans have a higher average income of $41,800 a year, though that’s not too surprising, considering a college education is a proven path to higher earning potential.

A major criticism of education debt is its tendency to hold consumers back financially, for instance, making it more difficult to buy a home. There’s plenty of research on the negative long-term impact of student debt, but there’s a bit of good news in the Experian analysis. While 13.1% of all consumers ages 18 to 34 have a mortgage, 18% of those in that age group who have student loans have a mortgage.

On top of that, student loan borrowers have an average credit score 20 points higher than the overall 18- to 34-year-old average (620 versus 600, on the VantageScore 3.0 scale), suggesting that those loans allow the borrowers to build credit. As long as consumers can afford their payments and they make them on time, student loans can be beneficial to credit. (If you have student loans and want to see how they’re affecting your credit, you can check your credit scores and get an overview of what’s affecting them for free through Credit.com.)

The analysis highlights different sides of a well-worn argument: Education debt is growing at an alarming rate — it currently stands at $1.2 trillion nationally — but student loans aren’t without benefits beyond the education they facilitate. Borrowers need to prioritize taking out only what they need and can expect to repay, and when those bills come due, they need to be a priority.