24/7 Wall St.

By now it’s an accepted fact that millennials have so much student loan debt that they can’t and don’t want to borrow more. Unlike most accepted facts, this appears pretty much to be true. What is less well-known, perhaps, is that debt among the baby boomers has jumped 60% in the years between 2003 and 2015 according to a study by the Federal Reserve Bank of New York.

There are two possible explanations for the shifting of debt from the young to the older. First, of course, is that the U.S. population is getting older. Second, Americans seem to be changing the amount of debt they are willing to hold at a given age.

The study’s authors noted:

As the baby boom generation ages, the population of older individuals has increased substantially. And with the coming of age of the millennial generation, the population of younger adults has also increased.

While we might expect the distribution of debt to grow as the population ages, in fact debt balances are growing among older Americans and not among younger Americans.

24/7 Wall St.
Merrill Lynch Identifies Top Thematic Stock Picks for the Rise of Millennials

Comparing debt balances in 2003 and 2015 leads authors to say:

First, at each age the average student loan balance per borrower more than doubles. Second, the age distribution of each debt type shifts decisively to the right. Younger borrowers hold lower per capita balances in every debt category save student loans, and older borrowers hold higher per capita balances in every debt category save credit card debt. Setting aside the influence of an aging population, it remains the case that in 2015, on average, younger borrowers held less non-student debt and older borrowers held substantially more debt of nearly all types, than comparably aged borrowers held in 2003.

The full report contains more data, but we want to note especially the conclusion:

Hence the aging of the American borrower bodes well for the stability of outstanding consumer loans. At the same time, the likely combination of muted credit access and lower demand for credit that we observe among our younger borrowers may well have consequences for growth. The graying of American debt that we observe between 2003 and 2015, then, might be interpreted as a shift toward greater balance sheet stability, and away from credit-fueled consumption growth.