Debt, or “credit,” isn’t always a bad thing though. Taking on student loans can help pay for college, and paying a home mortgage on time builds equity.
The study confirms this idea, which might seem a bit paradoxical at first. Debt is concentrated in areas with high household income (because you’re more like to get access to credit from a bank if you have a good income), and high housing prices (because people need—and can afford—to take out mortgages to buy a house).
It’s no surprise, then, that New England has some of the highest debt concentration in the country. Massachusetts’s average total debt per person is $73,156, the sixth highest in the nation. Massachusetts also has one of the highest average household incomes in the country.
A majority of debt in the state is from mortgages—$55,503 per person, to be exact. The median cost of a house in Massachusetts in 2013 was $328,527, the country’s fourth highest.
But as many Americans know, debt can also be a long-term burden. Paying off debt—particularly the kind that results from sudden emergencies or basic overspending—can feel a lot like pushing a massive boulder up a mountain for eternity, Sisyphus-style.
The Urban Institute notes that the study underrepresents low-income Americans. Its data does not include people without credit files, about 22 million Americans, or 9 percent of the population. People without credit files are usually low-income, according to the report, and if they get loans, they usually come from unregulated lendors like family, friends, or pawnshops.
Mikaela can be reached at mikaela.lefrak@globe.com or via Twitter @mikafrak.