New research funded by the National Endowment for Financial
Education (NEFE) investigates financial inequality and insecurity among
Americans from age 20 to 30, focusing on individual and household education
attainment and the types of debt held. The study, conducted by The Ohio State
University, suggests that while debt does not always become an unbearable
burden, it makes young adults more vulnerable to financial problems when
troubles do arise.
Community college attendees are at the forefront of this
vulnerability. More diverse and often from lower-income family backgrounds,
they represent a financially precarious population attempting to get ahead by investing
in postsecondary education. On average, they are more likely to start school
later and stay in school longer despite a shorter overall degree program—only
39 percent have earned a two-year degree within six years of starting.
Furthermore, individuals who obtain an
associate degree carry differing portfolios
of debt and the greatest financial burdens, relative both to bachelor’s degree
holders and individuals who never enrolled in college.
Most data and assumptions about college focus on bachelor’s
degrees, but these are not universally translatable to two-year degree
pursuers. Understanding their unique challenges forces the field to treat them
as a distinct group rather than lumping them in with traditional four-year
students.
When compared to other degree holders, those with an
associate degree:
- Have more exposure to vehicle and credit card
debt and a higher rate of loan delinquency.
- Are more likely to pay higher interest rates on
student loans.
- Were hardest hit during the Great Recession.
- Are more likely to have experienced other major
life events such as marriage and childbearing during the same period that they
are pursuing educational credentials.
In delivering financial education for community college
students, there is an opportunity to address situations common to their
experience. Individuals seeking an associate’s degree are a distinct group that
deserve consideration, especially when it comes to the financial education
resources that colleges provide.
Executive Summary: Debt by Degrees: Educational Attainment and Debt Profiles