The Role of Student Loans in Credit Card Access Across Generations

In this paper, we study how a creditor evaluates the costs and benefits of educational services in credit supply decisions. Using the Federal Reserve's Survey of Consumer Finance data, we measure educational costs from outstanding student loan amounts and student-debt service ratios and estimate their relationship with credit card limits and credit-request rejection rates. We find that households are limited in access to unsecured credit while repaying student debt, implying a prominent role of student debt in generating liquidity constraints. Particularly, we find middle-to-older-aged households have a higher probability to be rejected for credit requests than younger households, who have recently entered the job market while repaying their own debts