With the high cost of education, many college graduates leave school burdened with a high amount of debt.
But according to a study by online loan marketplace LendingTree, millennials in Jacksonville are dealing with another major debt burden: car loans.
A LendingTree study of the 50 largest U.S. metropolitan areas found that millennials in Jacksonville have some of the highest nonmortgage debt loads in the country, with a median balance of $25,947. That ranked Jacksonville fifth among the 50 cities.
Auto loans account for 38.5 percent of Jacksonville millennials’ debt, slightly more than student loans at 37.1 percent.
For the country, student loans are the biggest burden, accounting for 40 percent of millennials’ debt while auto loans are at 33 percent.
Millennials are defined as people born between 1981 and 1996, which means they are 22 to 37 years old.
“The millennial generation makes up the younger portion of adults, and as they build their careers, families and communities, they’re doing it encumbered by personal debt,” said Kali McFadden, senior research analyst at LendingTree, in a news release.
A high debt burden does not correlate to a high cost of living. LendingTree found three of the four cities with the lowest levels of millennial debt are some of the most expensive cities to live in: New York, Los Angeles and San Jose, California.
LendingTree found that unsecured debt such as credit cards and personal loans account for a larger portion of debt in those cities.
San Antonio millennials have the highest debt burden with a median balance of $27,122. Auto loans are the biggest issue there, accounting for 43.2 percent of total nonmortgage debt.
While Jacksonville ranks poorly in millennial debt levels, another LendingTree study last week showed the area ranks better in another debt category: the number of homeowners who have paid off their mortgages.
The study found 39 percent of Jacksonville homeowners are “free and clear” of any mortgage debt, ranking the area 20th out of the 50 cities.
LendingTree said some cities ranking high on this list are not necessarily experiencing positive trends.
Six of the top 20 cities are in California, which have some of the highest home prices.
LendingTree said California’s property tax laws discourage homeowners from moving, so they stay in their homes longer and eventually pay off their mortgages.
Detroit had the highest percentage of free and clear homeowners at 55 percent, but LendingTree said that’s indicative of the difficulty residents have in getting mortgage loans in the first place.
That gives Detroit a lower homeownership rate.
Miami ranked second with 52 percent of homeowners free and clear.
LendingTree attributed that to the large number of wealthy foreigners buying property in Miami who pay with cash outright.
Overall, a large number of free and clear homeowners is a positive.
“As home prices rise, these homeowners receive the full benefits and see their wealth accumulate,” LendingTree Chief Economist Tendayi Kapfidze said in a news release.
“Homeowners who do not have mortgage debt can decide if and how they want to access this wealth, perhaps by taking out a loan to address life needs, and are generally better able to absorb financial shocks,” he said.
