A discussion about debt these days often brings topics around student lending and the financial status of Millennials and following generations front and center. I have only scratched the surface of this predicted massive financial blowout, I’ve found these bits of information to be both useful and unsettling:
1. Gap in Data
There is “lack a full understanding of how student debt affects financial decisions and how future problems in repaying student loans may impact other parts of the economy because the student loan market is “quite opaque,” according to Rohit Chopra, Consumer Financial Protection Bureau.”
2. The Next Bailout (which is already happening)
“[W]hile today’s grads may be part of the most educated generation in history they are also the most indebted twentysomethings the world has ever seen.”
3. There are about 80 million Millennials!
“The sheer number of millennials — about 80 million — makes them a significant force in the U.S. economy. But many of them have trouble accurately answering basic personal finance questions, spend more than they make and are worried about their debt”
4. Stats and Facts from Pew’s Recent study on Millennials:
• About half of millennials with student loans say this debt has made it more difficult to make ends meet.
• Unemployment remains high. Pew says 13 percent of the 18-to-24 age group were out of work in the first month of this year.
• The share of young adults living in their parents’ home reached a historical high in 2012, three years after the Great Recession ended.
• Most millennials say they would like to marry. But many, especially those with lower levels of income and education, don’t think they can because they don’t have “a solid economic foundation.”
• When compared with the Gen Xers and boomers, millennials have less wealth and income than the two immediate predecessor generations had at the same stage of their lives.
Some useful tips for those heading off to college despite the enormous price tag. I doubt that many college bound students calculate their return on investment…but in the least, some good research will likely pay off.
It’s no surprise there have been new approaches to ease this financial burden:
SoFi offers a new model to help students refinance their federal and private student loans by directly connecting borrowers with lenders.
GiveCollege and GradSave provide crowdfunding platforms so that aunts, uncles, friends can contribute to a student’s
Pave offers a “fair, innovative financial agreement that’s affordable for talent and meaningful to backers” Students provide a portion of their future earnings to funders once they graduate and make more than 150% FPL.
Kalamazoo Promise Anonymous donors are sending their city’s students to college debt free.