Emerging and Young Adult Student Loan Borrowers: Financial Behaviors and Characteristics

We examined patterns and sociodemographic correlates of financial characteristics and behaviors among emerging and young (18-34-year-old) student loan borrowers who were repaying their loans. Employing latent class regression modeling on a subset of the 2018 National Financial Capability Study (N =1,490), we explored heterogenous constellation of patterns in financial characteristics and behaviors of these borrowers. Results indicated four distinct classes of financial characteristics and behaviors: financially strained (20.8%), financially balanced (29.2%), financially capricious (20%), and financially vulnerable (30.1%). Gender, race, and education were found to be consistently correlated with financial characteristics and behavior patterns. Marital status, income, employment, and welfare services use were found to be associated with some but not all latent classes. Findings have implications for financial counselors and can help them detect distinct patterns of financial characteristics and behaviors among young student loan borrowers and customize their intervention programs to mitigate negative consequences of student loan delinquency and default.