Four ways student debt is wreaking havoc on millennials

(Bloomberg) – Navient, the country’s largest student debt servicer, put out a report Wednesday that suggests young people are doing just fine with their finances.

The study surveyed 3,000 millennials and concluded that they are happily taking out mortgages, starting families, saving money, and managing their budgets. “Young adults are not only financially healthy but also actively focused on saving,” the report said. Navient may be overstating things.

Here are four reasons you should not be convinced that things are going that well for young people who took out student loans.  

1. Student debt seems to dampen homebuying

People who finished college were more likely to have a mortgage than people who got only a high school education, the Navient study showed. Students who took out loans for college and didn’t graduate, however, are worse off than those who never went at all.

“Completing a degree is a more important factor in financial health than whether an individual borrowed for a degree,” said Navient CEO Jack Remondi, in an emailed statement.

Sixteen percent of people who borrowed for college and dropped out had a mortgage, compared with 20 percent of people who didn’t have any education past high school. About 30 percent of college students in the U.S. drop out before finishing their degree, according to a 2014 report by the National Student Clearinghouse. Many of those people likely racked up debt without achieving the credentials that could have helped them pay it back. 

That’s part of the reason that in 2012, people with student loan debt became less likely to have mortgages than their debt- free peers for the first time in at least a decade, according to the Federal Reserve Bank of New York. Previously, people with student debt were more likely to have a mortgage, which makes a certain kind of sense. More debt implies more education, and we should expect highly educated people to get a jump on buying a home — their advanced degrees would, in theory, boost their lifetime earnings and help them carry that higher debt load. But in the U.S., more and more people  leave school in a financial hole deep enough to affect their likelihood of doing one of the key things that marks their economic ascendancy: buying a home.

2. Young people are delaying starting families

The Navient report suggests that 20- and 30-somethings are leading normal romantic lives, shacking up, having kids — the works. Again, though, people who never finished college behave differently than those who did. 

Fifty-two percent of people who got their bachelor’s degrees were married, compared with just 39 percent of college dropouts with debt. The data also showed that people who have student debt are less likely to have kids. Thirty-four percent of college grads who still had education debt said they had children, compared with 44 percent of their peers without student debt.