A TransUnion study  discovered that in spite of the rises in student loan balances for the past decade, younger consumers have not allowed loan obligations to hinder repayment of other credit-related items such as auto loans and mortgages when compared with peers with no student loans. These findings place a contradiction on the belief that student debt is preventing young adults from accessing credit.
"Going to school impacts young consumers' access to credit; while in school, students may be less likely to have a job and generate the income necessary for loan approval,” said Steve Chaouki, EVP and the head of TransUnion's financial services business unit. “However, most catch up once they leave school-and their ability to catch up has not changed over the past decade."
The study noted that, compared to students without loans, consumers ages 18 to 29 that are repaying their student loans are usually able to get new loans. These students perform as well or better on those new loans. Student-loan consumers in their 20s are also more likely to surpass those without loans when taking out mortgage and auto loans and credit cards in three to six years.
After students start to repay their student loans, they begin to have new mortgage obligations and higher new auto and credit card open rates than those with no student debt, TransUnion says.
"Our study demonstrates that consumers in their 20s with student loans in repayment-that is, once they finish school-are in fact able to access credit at levels similar to or better than their peers who do not have student loans,” Chaouki said.
The data in the study showed an increase in the amount of consumers ages 20 to 29 with student loans from 32 percent in 2005 to 52 percent at the end of 2014. Student loan balances have increased from $589 billion in Q1 2010 to $1.1 trillion in Q1 2015. The overall loan "wallet" for consumers ages 20 to 29 for student loans has also grown dramatically, increasing from 12.9 percent in 2005 to 36.8 percent in 2014, an increase of 186 percent in relation to other products such as mortgages, credit cards, and auto loans.
The study also shows that both, consumers with student loans and without loans were affected by the changes in the economy and shifts in credit access. Consumers ages 18 to 29 with credit obligations like mortgages, credit card, and auto loans declined significantly between 2005 and 2012.
"Participation rates for mortgages, credit cards and auto loans dropped significantly between the 2005-2007 and 2012-2014 timeframes-and impacted both consumers repaying student loans and those in the control group to a similar degree," said Charlie Wise, co-author of the study and VP in TransUnion's Innovative Solutions Group. "However, just as we observed in 2005, student loan borrowers in 2012 generally left school with lower loan participation rates than their control counterparts, likely due to difficulty in accessing credit while a student with little or no income.”
To view the complete study visit: TransunionInsights.com