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Why students loans aren't all that scary
According to research from TransUnion, student loan balances have increased from $589 billion in the first quarter of 2010 to $1.1 trillion in the first quarter in 2015. - photo by Tyler Stahle
Student loans might not be as scary as you think.

While many experts express worry about the growing national student loan balances which have now eclipsed the $1 trillion mark recent research from TransUnion suggests that such fears may be misguided as todays college graduates are not only paying off student debt, but getting approved for new mortgages and automobile loans as well.

In fact, the study, which analyzed the credit reports of student loan borrowers between the ages of 19 and 29, found that recent graduates with student loan debt arent too far behind their non-debt classmates in applying for and getting loans to finance purchases such as homes and new cars. The study did not mention why recent college grads with debt are getting approved for new loans.

But the report found that within the first few years after graduation, graduates with and without student debt had very similar rates of credit activity. Those who graduated with student debt were also less likely to be late on payments for car or credit card loans.

We did not find a material impact on younger consumers by this growth in loans, relative to where they were a decade ago, said Charlie Wise, vice president of TransUnions Innovative Solutions Group and co-author of the study.

Wise noted that the turbulent economic times over the years in which the study took place were responsible for shifting the age groups credit activities as a whole, and it didnt matter if a graduate had student loans or not.

The student loan group is not more impacted, he said. For example, within months of graduation, roughly half as many 2009 grads had mortgages compared to new 2005 grads, whether they had student loans or not.

However, just because student loan debt can be managed doesnt mean that it isnt having an effect on the buying decisions of recent college graduates.

In fact, a 2013 survey from American Student Assistance found that 27 percent of graduates said it was difficult to purchase daily necessities because of overwhelming student loans, while 75 percent said student loan debt was affecting their decision and ability to purchase a home or an automobile.

Logic will tell you that student loan debt has to affect the ability for people to purchase, said Paul Combe, president of American Student Assistance.

Although some graduates can manage their student debt while also meeting financial goals, like getting mortgages and purchasing homes, such situations are more of an anomaly and not customary, said Harriet Brackey, an investment officer at GFK Wealth Advisors, in an interview with

Brackey also said that some graduates with student debt are limited in what they can buy because the debt they receive from new loans is combined with their student debt, making it hard for them to budget.

I dont think students have resolved the debt issue, said Brackey.
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