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The Boston Globe

Business

Debt burden forcing younger workers to delay major purchases

NEW YORK — The anemic economy has left millions of younger working Americans struggling to get ahead. The added millstone of student loan debt, which recently exceeded $1 trillion in total, is making it even harder for many of them, delaying purchases of things like homes, cars, and other big-ticket items and acting as a drag on growth, economists said.

The Federal Reserve Bank of New York, in a new study, found that 30-year-olds with student loans are now less likely to have debts like home mortgages than 30-year-olds without student loans — even though most of those with student loans are better educated and can expect to earn more money over their lifetimes. The same pattern holds true for 25-year-olds and car loans.

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‘‘It is a new thing, a big social experiment that we’ve accidentally decided to engage in,’’ said Kevin Carey, the director of the Education Policy Program at the New America Foundation, a research group based in Washington. ‘‘Let’s send a whole class of people out into their professional lives with a negative net worth. Not starting at zero, but starting at a minus that is often measured in the tens of thousands of dollars. Those minus signs have psychological impact, I suspect. They might have a dollars-and-cents impact in what you can afford, too.’’

The weak economy and tight credit standards remain the main culprits preventing young people just establishing themselves from making major purchases.

But millions now face putting a substantial share of their take-home pay toward past debts rather than present needs. Student loan debt leaves them with less money for things like clothes and restaurant meals. And it is even more likely to suppress purchases of more expensive items that need to be bought with credit.

On the other side of the equation, many college graduates now in their 20s and early 30s should eventually be able to make up for lost ground. Students who take on debt to pay for higher education commit themselves to paying off huge sums, but they usually lift their lifetime earnings by substantial amounts.

For most young workers, gaining a college degree remains well worth it in the long run, even if it delays some purchases in the near term. ‘‘For an individual going to college and ending up with a lot of debt — you’re still better off,’’ said Chris G. Christopher of the forecasting firm IHS Global Insight.

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