Student Loans May Explain Rural Population Decline

Rural counties have been losing population in recent years and urban counties have been growing. One factor behind rural population loss is the migration of young adults from rural to urban areas. What's driving young adults away from their rural homes? Student debt may be a factor, according to a study by the Federal Reserve Board. In an analysis of how student debt affects the migration of young adults in rural areas, the Feds examined Equifax/Federal Reserve Bank of New York Consumer Credit Panel data, comparing student debt levels of young adults in rural areas with changes in their census tract of residence over a six-year time period. These are the findings...

• Young adults with student loans were less likely to remain in rural areas than those without student loans—52 percent of those with student loans were still in a rural area six years later versus 66 percent of those without student loans.
• Young adults with the greatest student loan debt were least likely to remain in rural areas—37 percent of those in the highest quartile of student loan debt were in a rural area six years later versus 73 percent of those in the lowest quartile of debt.
• Young adults who moved to metropolitan areas did better than those who stayed in rural areas. They paid down their loans faster, had higher credit scores, and were more likely to have mortgage debt (own a home).

"With students borrowing at higher rates and in larger amounts to pursue postsecondary education," conclude the Fed researchers, "student loan debt may play an increased role in the dynamics of urban-rural migration."

Source: Federal Reserve Board, Consumer and Community Context, January 2019, "Rural Brain Drain": Examining Millennial Migration Patterns and Student Loan Debt," (PDF)