This Is Where Your Customers Went

Any business wondering where the customers went can find out by taking a look at the Federal Reserve Board's new estimates of household debt. Millions of households, it turns out, are carrying the baggage of education loans, preventing them from buying homes, cars, furniture, going to restaurants, or taking vacations.

In 2009, a substantial 18 percent of households in the United States had education loans. This was up from 16 percent in 2007. By age, the percentage of households with student debt extends well into middle age. Take a look:

Under age 35:  37%
Aged 35 to 44: 20%
Aged 45 to 54: 18%
Aged 55 to 64: 10%

These loans are not trifling either. The size of student loans exceeds vehicle loans and far surpasses credit card debt. For households with student debt, the median amount owed was $15,000 in 2009, up from $12,400 in 2007 (in 2009 dollars)--a 21 percent increase in two years. For the record, the median amount households owed on vehicle loans was a smaller $12,400. The median amount owed on credit cards was just $3,300.

The households most burdened by student loans are the same ones many businesses were counting on to spend their way out of the Great Recession: married couples with children (24 percent have student loans, and they owe a median of $15,000), renters (24 percent have student loans, and they owe a median of $12,000), and college graduates (25 percent have student loans, and they owe a median of $20,000).

A funny thing happened on the way to where we are today. Your customers signed on a dotted line, and now their current and future income is being siphoned off by someone else.