Household debt in America has been reshaped in ways that could potentially affect how financial experts can help manage a consumer's liabilities.

The overall debt burden of U.S. households is $100 billion smaller than it was in 2008, and its breakdown looks a lot different, according to a new report from the Federal Reserve Bank of New York. Though mortgage debt remains the biggest burden, its share of household debt has declined along with that of credit card debt, while the share of student debt and auto loan debt has risen.

As of the end of 2016, mortgage debt accounted for 71% of household debt, down from almost 79% in 2008, while student debt more than doubled since 2008 and more than tripled since 2003, to 10.4%.

Auto loan debt had a 9.2% share at the end of 2016, about one-third larger than its 2008 share. All three types of debt ate up bigger shares of households' income than credit card debt.

In dollar terms, housing debt fell $1 billion from its 2008 peak to $9 trillion, while student debt rose $700 billion to $1.3 trillion and auto debt gained $350 billion to $1.16 billion.

Changing Demographics

The demographics of U.S. debt are also changing. Older households, headed by those 60 and older, now account for just over 22% of outstanding U.S. debt, up from near 16% in 2008.

While that is not necessarily good news for older households given that many are in or near retirement, it has raised the quality of debt outstanding since older households tend to have higher and more stable incomes than other age groups, according to the New York Fed.

As a result of these demographic changes plus tighter lending standards for mortgages — though not for auto loans — delinquency rates have fallen overall and foreclosure and bankruptcy rates are at their lowest levels since the New York Fed began collecting this data in 1999.

The creditworthiness of borrowers has also risen. Loan balances for borrowers with credit scores over 760 have risen by $878 billion while balances held by subprime borrowers have fallen by $752 billion since 2008.

But despite this good news, all is not well in the world of U.S. consumer debt, especially for younger people.

The Student Debt Burden

Student debt today is more than five times what it was 14 years ago as the number of borrowers has increased along with the average size of loans and length of repayment schedules, according to the New York Fed.

It totals $1.3 trillion and borrowers number 44 million, up 60% from 2006. Graduates owed an average $34,000 in student loans in 2015 compared with $20,000 just 10 years earlier.

About one-third of them owed less than $10,000, 65% owed more than $25,000 and 5% owed more than $100,000, but those high-balance borrowers accounted for about one-third of the balances outstanding.

Traditionally, high-balance borrowers have sharply lower default rates than other borrowers, but that gap is narrowing. The five-year default rate for borrowers owing more than $100,000 who graduated in 2010-2011 was 21% at the end of 2016 compared with 17% for those who graduated between 2007 and 2009 and to 6% for those who graduated between 2005 and 2006.

Overall default rates, however, peaked at around 30% in 2013 and have stabilized since then but delinquency rates “remain stubbornly high,” according to the New York Fed Report.

The rise in student debt has implications for the broader economy, specifically the housing market and consumer spending over the longer term.

“Those with significant student debt are much less likely to own a home at any given age than those who completed their education with little or no student debt,” said William Dudley, president and CEO of the New York Fed at a press briefing about the new report.

He noted that the failure to own a home has broader economic implications. “Homeownership is more than just consumption — it has historically been an important form of wealth accumulation. For a large share of households, housing equity is the principal form of wealth.”

Despite the finding that student loan debt hampers future home ownership and wealth accumulation, not attending college is an even greater impediment.

“College attendance is associated with higher homeownership rates by age 25, regardless of debt status,” according to the New York Fed report. And those who graduate have even higher rates of homeownership. “Graduation, measured by highest degree attained, is associated with markedly higher homeownership rates, irrespective of debt status.”

Instant Insights /

The New Shape of US Household Debt

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