Millennials are struggling after the recession. 40% of millennial’s have some form of significant debt. This is alarming, since they are the age group that tends to spend more money on average than other age groups. This debt can hurt the economy, and while it may not drop it back down to recession status, it will damage the US’s outlook.
Millennials are those between the ages of 18 and 33. These men and women are a core group to our society and economy, and any debt they inquire goes against their helping the economy. This age group is usually the first to take hold of new trends and technology, as well as the age group with the most debt. While it is traditionally thought of older generations incurring more debt, millennial’s have nearly double the debt of baby boomers. This debt not only harms the economy, but also their chances to get out on their own, buy a home, buy a new car, invest in business.
One of the major factors in millennial debt is student loans. The vast majority of those who attend college in the United States have to take out some form of student loan, either from a private bank or from the government. These loans, plus their interest, must be paid back after a student drops below “full time” student status, or after graduation. The interest on these loans can cause payments to drag on for years, and while it is possible to get a smaller interest rate, the process is so complicated that few choose to do it. Congress recently killed a bill that would have made refinancing these loans easier. Right now the only way that graduates can cut their student loans is to work for a government agency, as after 10 years of employment the government will right-off your loan. This is not an option for all graduates, as not all job fields are employed by the government.
This surge in debt can hinder millennials from buying a house. High debt can drop your credit score, and people with bad scores are not ideal candidates for home loans. While these debt numbers are bad, millenials are also known to be big savers. Their “formative years” occurred during the recession, and they learned to save their money for a splurge. While their credit may be suffering, chances are they have a 401k or a savings account. Many people of this age group also had to watch their parents suffer financial loss during the recession, and learned that saving money is not a privilege saved for the wealthy, but it is a necessity for everyone.
Millennials out rank baby boomers when it comes to debt. While this is troubling, it should not come as a shock, as many of the debt can be accounted for in student loans. This debt can hurt the overall economy, as this age group is not spending at the rate they used to, however they do tend to save money. This can help the save the economy in the future.