A decade after recession, Federal Reserve released its latest report, claiming millennials are going broke due to hefty student loans. Released in November by Christopher Kurz, Geng Li and Daniel J Vine, the study stated that the financial habits of millennials are less about how they spend money, and more about not having any.
While big industries emerged stronger in the post-recession period, millennials — constituting the largest workforce in the US history — witnessed increasing college education costs with just a few streams of money.
At present, 44 million Americans are carrying $1.5 trillion in outstanding student debt, half of which is being held by the young population.
The report released by Federal Reserve found that millennials are less financially affluent than the earlier generations. It states that the group has “lower earnings, fewer assets and less wealth,” and that student loans are fetching out of their financial lives in concrete ways.
Earlier this year, an analysis based on the percentage of paychecks towards repaying student loans by the people was released. It revealed that the millennials drained the largest portion of their paychecks to pay down student debts.
Statistics reveal that in areas with high populations of young people and low-income borrowers, including Washington D.C. and New York City, student loan borrowers have debt burdens 10 percent or higher.
Millennials, the most educated troop in the US history, were forced by an uneven economic recovery to borrow large sums of student loans. This, along with unregulated student loan industry, also contributed to the distressed economic conditions of millennials, where they are earning wages lower than what of same age earned in 1984.
Such a situation has occurred in spite of the fact that the economy is 70 percent more productive, and that millennials in America are twice as likely to have college degrees.
Student loans are keeping away the effective generation from participating fully in the economy, buying homes and saving for the future.
At present, the need is for the leaders to provide considerable policy solutions to deal with the growing debt crisis due to student loans. While working on the solutions, authorities must also hold accountable those worsening the problem, including the Secretary of Education Betsy DeVos for allowing companies like Navient and others to profit from the debt crisis.
Millennials definitely deserve solutions; otherwise they will continue to live in an economy with lower earnings, excessive education costs, and extreme levels of student loans.
Millennials are the largest living generation in the history of US, which could turn beneficial for the economy in the long run. While it is proving to be the contrary, the leaders must realize the rising debt crisis, which is created by student loans. They must address the problem before it deteriorates the generation that could do wonders for the country.