Why More than 75 Million Millennials Struggle with Student Debt
Over 44 million Americans, of which a large percentage are Millennials, grapple with student debt. The average Millennial is likely to commence their economic life with a negative bank balance trying to breakeven from student debt in addition to the weight of expensive everyday living which may necessitate more debt.
In the last two decades, the national student debt burden has more than tripled, and it now stands at a staggering $1.45 trillion. Several reasons have led to the rising popularity of student loans despite the financially disadvantaged position they actualize not to mention the stress and penny-pinching that accompany payment. Here is why over 75million Millennials struggle with student debt.
The increased importance of higher education
In almost all industries, a degree from a recognized institution is the bare minimum one is expected to possess for consideration – often, for entry-level jobs. This has dramatically increased the demand for higher education, but sadly, most Millennials are not from affluent backgrounds that can afford to sponsor their college degrees.
Given that most weigh the cost of higher education against the promise of a good life, financial security, and achieved dreams, much thought does not go into the perils of taking study loans; and even when it does, the pros easily outweigh the cons. This makes it easy for Millennials to take study loans which they eventually struggle with when the forecasted success trajectory fails to materialize.
Progress in the job market
Assuming there is a possibility of getting an okay job without higher education, Millennials still have the reason of career progress to worry about. In a labor market where every other person angling for a good job is highly educated, many rationalize that taking a job without a degree will only mean that those who are better educated with overtake them on the road to success.
So, most end up opting for student loans to equip themselves better to tackle career paths in the shortest time possible. However, things hardly ever work out as expected once out of school, and Millennials are left facing considerable debt amounts.
Status
In society, few things offer the respect and approval so crucial to individuals that wealth, education, or a combination thereof offer. To parents, a well-educated son or daughter is a source of pride; socially, it empowers a person to join elite circles and sometimes even marry the desired partner; in the community, it gives one’s opinions and say more weight.
From this perspective, it becomes apparent that education improves one’s status immensely. Coupled with the fact that it is also the primary enabling factor to start accumulating wealth for many, it then makes a lot of sense to take the risk of a student loan to make it all come together. When things fail to work out as anticipated, as has been the case off late, debt struggles become the norm.
Expectations
Many Millennials expect that after getting a degree, they will get a good job and depending on what they expect a good job to pay, they imagine that monthly loan payments will be a breeze. However, a lot can change economically in the four years typically associated with getting higher education.
Millennials finish school only to realize that the jobs available are not as lucrative as they had hoped. Desperate to feed themselves and achieve independence, they take the low paying jobs available as they search for the ever elusive greener pastures. With a low salary, the ability to service loans comfortably is compromised.
High cost of living
To compound matters, Millennials quickly realize that living costs are untenable on low salaries. For this reason, more than any other generation, more Millennials continue living with their parents into their mid and late twenties.
For those who decide to move out, they are soon forced to take other loans – such as a car loan – to make life more convenient and bearable. Until one gets a lucky break, the situation continues to deteriorate, and this is the stage many Millennials are at as they wait and hope that an excellent opportunity will come by.
The nature of student loans
Refinancing to better terms and other channels of easing student loan burdens have only become available recently. Despite the efforts, student loans remain in the top tier as one of the major forms of debt lacking in coping and refinancing options.
For instance, student loans are outright the most unforgivable loans. In fact, they are mostly immune to bankruptcy as the collateral is one’s ability to work and earn. This means that as long a person can work, they must service their loans regardless of the income. Student loans are also highly inheritable – hence, if the beneficiary dies, the cosigner can easily be held accountable.
The promise of a good life to one who dreams of it as many Millennials do is too much to resist, and this is precisely what student loans offer. In an ideal world, graduates would get good jobs which would make it easy to make payments, but uncertain economic times add another variable into the equation upsetting the balance.
The effect is that Millennial student loan beneficiaries struggle to service their loans, becoming stressed and disillusioned in the process. Among other reasons, experts blame such loans for the increasing cases of Millennial mental conditions, stress-related diseases, and even suicide.