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12 | Th e M Rep o RT Advertisement Student Loans Dampening Demand for Mortgages and Auto Loans S tudent loan debt now outranks auto loan, credit card, and home-equity debt with an aggregate balance of $966 billion as of the end of 2012, and student debt delinquencies are rising. Is the growth in student debt holding down demand for mortgages and auto loans? Some experts think so. Two economists at the New York Federal Reserve recently published a blog post titled "Young Student Loan Borrowers Retreat from Housing and Auto Markets." In an analysis of data from the FRBNY/Equifax Consumer Credit Panel, the economists found that for the first time in 10 years, consumers aged 30 (the median age of first-home buy- ers) with student debt were less likely to hold a mortgage than consumers aged 30 who had no student debt. (See chart.) The situation is similar for auto loans: Looking at consumers 25 years of age in Equifax data, the Fed economists determined that student debt was correlated strongly with higher likelihood of auto debt over most of the past 10 years—until 2010 when auto borrowing for 25-year-olds with or without student debt roughly reached parity. (See chart.) But student debt still implies col- lege, which implies earnings power. After all, that's why economists believed that consumers with stu- dent debt were more likely to have a mortgage and an auto loan until recently. Failing to get a complete picture of a borrower may cause you to pass up consumers who may be better risks than they ap- pear based on credit score alone. Another factor to consider: There are efforts in Washington to ease the student debt burden. For example, the Obama administra- tion recently directed the secretary of education to propose regulations to increase the number of borrow- ers who can cap their monthly payments on student loans at 10 percent of their income. The burden of rising student debt might be holding young borrowers back, but the num- bers show that consumers with college degrees will still make more than their less-educated peers. According to a presenta- tion available on the New York Federal Reserve website, median weekly wages are roughly $1,200 for consumers with a bachelor's degree or higher, versus slightly more than $600 for consumers with only a high school diploma. If you're not getting a complete view of your prospects, you may be passing on the opportunity to establish a valuable relationship with a young consumer. To learn more about how Equifax Verification Services can help give you a more complete picture of your prospects with employment and income verifica- tions, visit equifax.com/business/ verify-information.