The $1.1 trillion in student loan debt has become a real burden on the economy, contributing to the yawning chasm of U.S. wealth disparity, and dwarfing most other types of debt. For the year between the last quarter of 2012 and the end of 2013, student loan debt grew more than any other.
This worries just about everyone – with the young people actually shouldering the debt fretting the most.
More debt = less wealth
They have good reason to worry about the future. According to Pew Research, they have more debt, higher unemployment, and less wealth overall than either their parents or grandparents did at the same age. They are also the best educated generation – but they have paid dearly for that distinction, graduating with an average debt load of $27,000.
College grads are concerned about their high levels of debt, and are worried about paying it back. The Urban Institute found that 57% of those with student loans said that this issue concerns them, with those making the least money – under $25,000 annually – being the most worried.
A study by Wells Fargo found a similar result, with 36% of Millennials polled admitting that student debt is their primary financial concern. Some even question the value of taking on so much debt: nearly one-third said that they now feel they would have been better off skipping college altogether.
The negative ramifications of student debt are long-term
They might have a point. Evidence shows that starting off your working life with a huge debt load has negative repercussions far into the future. It became obvious early last year that onerous student debt was keeping young workers out of the housing market, an issue possibly exacerbated this year by the new qualified mortgage standards – rules that are meant to make certain that a borrower will be able to repay his or her mortgage loan.
Retirement saving is taking a hit, too. Although 37% of Millennials in the Wells Fargo study think that Social Security won't be available to them when they retire, only 49% are actually putting money toward retirement savings.
The Pew study also notes that the financial hardship foisted upon Millennials by college debt is causing them to eschew marriage. Only 26% of this group were wed by age 32, the lowest percentage of any age cohort. Not that they are against marriage: Nearly 70% of unmarried Millennials named the lack of financial security is the reason for their single state.
Despite all this gloom, Millennials are surprisingly upbeat about their future. Over 80% of respondents to the Pew study said that they either have enough money now to live the lifestyle they desire, or believe they will in the future. This group also has more faith in the future path of the United States than other age groups, with 49% saying that they think that the country's best years are yet to come. Without a national plan to reduce the burden of student loan debt, however, these young Americans may not see their own prediction come true.