Debt Facts Millennials Need To Know
Millennials may be the generation that thinks about debt the least, but has the most of it. Colleges and universities have only become more expensive and more competitive, meaning scholarships are fewer and further between and student loan payments are skyrocketing. We’re also part of a generation with a mentality of paying it off later. This is a mentality credit card companies take plenty advantage of, sending us a shameless number of offers for zero interest rates during the first year, relying on us to rack up big bills we cannot pay off in those first 365 days so they can hit us with huge interest rates after. But debt is very serious and can ruin a person’s life. It’s not just like a financial dunce cap that’s a bit embarrassing—it’s debilitating. Here are facts about debt millennials need to know.
Millennials have a lot of long-term debt
Around two-thirds of millennials have some outstanding long-term debt. This can come from a student loan, car payment, small business loan, or any other loan that is being paid off over an extended period of time. What’s more is that 30 percent of millennials have two forms of long-term debt.
Even high earners worry
Research has found that over 30 percent of millennials who earn over $75,000 a year still worry about making their student loan payments. The repayment is that debilitating.
High earners turn to quick, costly solutions
If you think those businesses advertising same-day loans are just for low earners, you’re wrong. Over 25 percent of millennials who earn over $75,000 a year have had to turn to short-term financial services. These often come with incredibly high-interest rates.
We aren’t paying our credit cards
The same research on student loan debts found that over 50 percent of millennials carry over a credit card balance sometime in a 12-month period, for which they can be charged awful late fees (as much as 25 percent for some cards).
We’re pulling from our retirement
Unfortunately, we are pulling from our retirement funds to make some loan payments. Roughly 22 percent of millennials have pulled from their retirement funds to help with long-term loan repayments.
Student loans and our salaries
One survey done by Citizens Bank found that most college graduate millennials under the age of 35 are spending 18 percent of their salary on their student loan payments.
We can’t even let loose
The same survey found that, due to these student loan payments, roughly half of college graduate millennials have cut back on dining out, travel, socializing, shopping for clothes, and even what they pay on their mortgage.
Most grads take out federal loans
The Citizens Bank survey found that a staggering 77 percent of college graduates had to take out federal loans to pay for college.
And we aren’t paying them back
A shocking 40 percent (possibly more) of grads with federal loans just aren’t making payments.
What can happen if you don’t pay
If you become seriously delinquent on your student loan payments, your wages can be garnished, your credit can be destroyed, and your social security could even be at risk.
We’re moving back home
More young adults between the ages of 18 and 34 are living at home with their parents than ever. This includes college graduates. A combination of factors is causing this, but debt is certainly one of them.
We may be headed for another 2008 crash
Our country’s overall debt is almost back at where it was in the 2008 crash. In the final quarter of 2016, our nation’s debt went up by nearly two percent.
Debt may follow us for a while
The Citizen’s Bank survey found that many millennials believe they will still be paying off their student debt in their 40s. That could mean paying for daycare for a baby, a mortgage, and student loans at the same time.
People don’t know (or won’t admit) how much they owe
Studies have found that an alarming number of Americans misreport how much debt they have. They either just don’t know, or are in denial about it—both of which are quite dangerous.
Our savings are in big trouble
Twenty-nine percent of millennials have more credit card debt than emergency savings. That means that, should an emergency come up, we’ll likely have to take out another loan and more debt to handle it.