Share of Young Americans With Debt at Lowest Level Since 1983

According to Pew Research Center, although young adults took a hit in the recession, many actually managed to decrease their debt from 2007 to 2010. In 2007, among those under the age of 35, their debt totaled $21,912. But in 2010 the median debt level of young adults fell to $15,473 which is a 29% decline in just 3 years. It was estimated that older adults owed more than younger adults and unfortunately, their decline in debt was modest compared to young adults. Older adults were $32,543 in debt as of 2007 but they did manage to pay off some of their debt. This brought their median total debt level to $30,070 in 2010 which is only a 8% decline in debt.

Today's young adults also did a better job of paying off their debt during the recession than young adults in other time periods. The Pew Research Center estimates that in 2010 78% of households headed by a young adult held any debt. Although this figure may seem high, this actually marks the lowest level of young debt holders since 1983 when this data first started being collected by the government.

Although this news is certainly welcome to those who worry about high debt ratios among young Americans, it is important to examine why they have less debt. For one, part of this decline is due simply to the fact that fewer young Americans own homes or carry credit card balances. For instance, in 2007 it was estimated that 48% of young Americans had credit card debt compared to 39% of young adults in 2010. Moreover, although the total median debt level may have been lower in 2010, the proportion of households carrying student debt rose dramatically. In 2001, only 26% of younger households had student loan debt compared to 40% in 2010, marking a 14% increase in less than a decade.

12 Million Americans Take Out Payday Loans

A new Pew Charitable Trusts report demonstrates the surprisingly high number of Americans who utilize payday loans.  These payday loans are generally short-term, high-interest cash advances that average $375.  The typical borrower takes out eight of these loans each year and spends $520 on interest.  The report states that 12 million Americans use payday loans annually.  69 percent use these loans for everyday expenses, such as credit card bills, mortgage payments, groceries and the like, whereas only 16 percent take out a payday loan to cover unexpected expenses such as unanticipated medical costs or car repairs.  The most common borrower is white, female and between 25 and 44 years old, but the study also found five other groups of Americans that are more likely to take out these loans: those without a college degree; Africans Americans; home renters; those who earn less than $40,000 a year; and those who are divorced or separated.