Meta Brown, Sydnee Caldwell, and Sarah Sutherland:

Last year, our blog presented results from the FRBNY Consumer Credit Panel (CCP) indicating that, at a time of unprecedented growth in student debt, student borrowers were collectively retreating from housing and auto markets. In this post, we compare our 2012 findings to the news for 2013.

Between 2012 and 2013, U.S. auto and housing markets recovered substantially. The CoreLogic national house price index rose by 11 percent from December 2012 to December 2013. According to the Los Angeles Times, “It was the [auto] industry’s best year since 2007.” Last summer, this blog post discussed the sources of the ongoing auto recovery. Here we pose two questions: What part have young borrowers, with and without student debt, played in the recent housing and auto market recoveries? And, have the housing and auto purchases of young student borrowers at last accelerated past those of nonstudent borrowers, to once again reflect their skill and earnings advantages?

The share of twenty-five-year-olds with student debt continued to increase in 2013, as the group’s average student loan balance reached $20,926. For those twenty-five-year-olds with student loans, student debt now comprises 69 percent of the debt side of their balance sheets. Given the increased popularity of student loans, some have questioned how taking on extensive debt early in life has affected young workers’ post-schooling economic activity.

Continuing to grow K-12 spending on top of property taxes is not a good long term strategy.