Millennials and Student Loan Debt

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Millennials might be paying significantly more for school and accumulating recording setting student debt, but they do not mind according to a new study of 500 college graduate students from Credit Sesame. Even though the price of college has long been going through the roof the Millennials who were born between 1981 and 2004 are still looking forward to attending college. They think it brings more opportunities than ever in comparison to the Gen X that were questioned. The primary difference between the Millennials and Gen X is how carefully the new undergrads are selecting their degree and exactly how strong it will prove in helping them develop a solid professional future.

Student Loan Debt

The findings are summarized below of what we identified upon completion of the research:

Follow the Salaries: Approximately 10 percent of Millennial parents earned more than $150k each year, compared to a paltry 3 percent of Gen X families. More than 25 percent of Millennial parents earned over $110k per year, compared to just 4 percent of Gen X parents. Not surprisingly, at the opposite end of the pay scale, almost one-third of all Gen X families made below $32k each year, in comparison to 16 percent of Millennial families.

The Cost: We learned that approximately 25 percent of Millennials joined a college that cost them over $25,000, where just 6 percent of Gen X enrolled in a college with similar fees. On the other hand, we learned that about 50 percent of Gen X paid below $10,000 each year for college, whereas only 27 percent of Millennials ended up in that low-cost range.

The Pay for Knowledge: Our figures even exhibited the importance of salary when it came to deciding on what major sign up for and it ended up being substantially different for the two generations. When it came to Millennials an astounding 33 percent asserted that their income had a large influence on his or her decision; however, just 14 percent of Gen X concurred that earnings were a major decider.

What is Your Honest Opinion?: When asked if college will be worth the price, 76 percent of Millennials had no hesitation about it, whereas only 68 percent of Gen X were in the same mindset.

Edvisors claims the class of 2015 is among the most debt-heavy class in US history and yet Millennials carry on to defend higher education. It makes sense, given that “Americans with 4-year university degrees earned 98 percent more an hour on average in 2013 than people without a degree,” as outlined by an analysis of Labor Department stats from the EPI. But that does not help make the debt any less intimidating.

The good news is student loans do not need to control the way you live. This is how you can take command of your current student loan debt:

Create a Method – Constantly working with your loans and minimizing them whenever you can isn’t only a wise short-term call, it will also reward your economic position long-term

Get Help – You can receive personalized options for repayment if you get aid from businesses such as Credit Sesame

Beware: Interest Rates – By paying over your monthly minimum amount anytime you can, you could lower the interest you’ll have to pay. It may well sound like obvious advice, but it is hardly ever carried out with extra cash which generally leads to leisure expenditures

• Ask Your Lender – For anyone who is experiencing difficulty paying off those school loans one of the best solutions is to talk to your loan provider to find out about possibly deferring some of the payments or even reducing

We will need to remember the value of a 4-year degree added considerably less benefit to Gen X as the cost reflected that value by being considerably less expensive. Currently, Millennials prefer degrees that can produce higher salaries and also those which are usually sought after from managers, not just now but in the long run as well. Even though for most students loans have become widespread and leaving post-secondary with a large amount of debt is even more common, it doesn’t mean that it will continue to be so forever. There are lots of solutions accessible that could lead you on a customized path to commence trying to pay back your debt in a significantly shorter period.

 

What’s your take on student loan debt? Is it a good or a bad debt? Should ROI on a degree be consider when choosing a major?

24 thoughts on “Millennials and Student Loan Debt”

  1. I’ve longed believed the key to ensuring college is worth it and debt doesn’t overcome any positive aspects is to 1) manage costs (e.g. attend community college the first two years while living at home, work part-time) and 2) ensure the discipline (e.g. STEM related) will meet the needs of the business/job environment.

  2. Even though we hear about the horrors of student loan debt, there’s clearly a market for these products. No one is being forced to go into debt for their degree, they choose it freely. Don’t get me wrong, it can be a rough lesson for a young adult, but at least they’re learning the lesson on something valuable (education) and hopefully not on something worse, like credit card debt. Anyway, I don’t see the problem being solved until the market for these loans isn’t needed anymore. And, full disclosure: I graduated with $36k in debt but it was the only way to pay for my engineering degree, so I look at it as a necessary inconvenience for most.

    • A good point Bryan if I had to go into debt I’d much rather go into it for an education than credit cards because of the earning potential it provides. I just hope someone is educating young adults so they make the best choices and minimize cost.

  3. I definitely think students should consider ROI when they choose a college major. What you major in can make a huge difference in your pay and lifestyle down the road. This is coming from someone whose husband earned a Bachelor’s degree in Theater Arts the first time around!

  4. ROI should 100% be considered when determining if a degree is worth it. I have friends now that are considering MBA’s and I make sure they’re well aware of this. Student loan debt sucks, and I still have a little. I might of tried a little harder to secure scholarships if I could do it again, but that’s probably all I would have changed.

  5. I don’t think you can say unilaterally whether it’s good or bad debt. I’d say that a computer engineering degree is probably a lot better debt than the debt to get an English degree in terms of ROI. But it’s still a pretty big gray area. I think the problem is that, to get a job in the career they love, a lot of liberal arts majors *have* to go to graduate school and thereby incur a ton of debt. Whereas a BA in Computer Science can pretty much get hired upon graduation. (Literally, I knew people that happened to.)

    • And that’s the point, this is the type of data students should be aware of to help in their major and career path decision. I don’t want to be a dream killer, but you have to look at it from a practical point of view as well.

  6. I always wonder how things will look for my daughter. The current price of college can’t be maintained. I think a lot of brick and mortar schools will go away as online becomes a better and more affordable option. Education is so important but only half of people actually work in the field they studied so it’s almost more important to find an affordable school and have little debt than to try and get a major degree and get loads of school debt.

  7. I have dramatically changed my opinion on the value of college over the last ten years as tuitions have gotten out of hand. It’s very difficult to find value in an undergraduate education that’s going to send you over $100,000 in debt. I loved the school I went to for college, but would never pay that money now for my son to go there.

    • I never got the whole wanting my children to go to the college I attended. I guess because I didn’t live on campus and commuted during my college days, that I never had that strong connection. When looking at colleges for my children we are targeting the best education and cheapest cost.

  8. For better or worse, student loans are defining the millennial generation. I think it’ll be even worse for the next generation, but we are the first ones that really need to deal with the huge debt load we carry individually and in aggregate. I am a big advocate of increasing income to offset the impact of student loans.

    • There’s no doubt a degree will help you earn more, but I believe students need to make the best degree/college choice up front to minimize debt.

  9. Great info graphic Brian. It makes sense to get a degree that will produce decent job demand in the future. Taking on debt is never good, but if you will get a job that pays over 65K then get the degree. Just use tactics to minimize debt as much as possible.

  10. Is college worth it? I have a masters and sometimes I’m not sure on the answer to this question. It’s not that I didn’t enjoy and learn a lot in college – I did. My hesitation comes from learning how many people are working in fields that don’t use any of their academic background from college. Perhaps it’s just worth it to have a degree, no matter what it’s in.

    • Thanks Cat. That’s why I think student should be doing some type of career research when selecting a field of study to understand what the job market will look like for them when they graduate.

  11. I have been chipping away at my student loan debt for a while now. The debt sucks, but I don’t regret my degrees. I do think it is important to consider the salary of your career field before taking on student loan debt.

  12. Student loans aren’t necessarily the issue. The real issue is when students are disconnected from the fact that they will need to pay them back and don’t take the time to make sure they are getting the best bang for their buck. If you go to a decently priced in-state school, for a major that is in demand, the student load burden shouldn’t be nearly as big of a concern. But if you go to an out of state private school because you really like it, for a major that doesn’t have the employment demand, that is when you will put yourself in trouble.

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