How Millennial Student Loans are changing the Economy

As Millennials, we live in a different financial universe. The squeeze between huge student loans and rising cost and affordability of housing is a deal-breaker and is putting our futures in jeopardy. 

A recent New York Fed report found that wages for college graduates have been declining for about a decade. 

As Millennials are becoming the most important consumers, their reality will change the Economy and economic growth considerably. It also changes the values of Millennials in relations to capitalism and banks as evidenced by the popularity of Bernie Sanders and moreover political candidates who aren't typical left or right, but alternatives to it. 

While Millennials also are digital natives that abide by an Amazon-Netflix reality, we are taking out loans, to pay off our student debts. This means, the main consumers in 2025, won't necessarily have much discretionary income to shop in Retail. Combine these trends with the cost of taking care of an aging population, the Millennial experience of being cheated out of a future is likely to stall economic growth considerably. 

This will mean many retail brands will go under, displacing a lot of services jobs.  Combine this with more technology automating jobs like that of truck drivers with driverless cars and chat bots that will outperform human beings in call centers and customer service, and you get an idea economically of how this will look.

We are just at the start of this trend. It's all connected, and Millennials are on the front lines of economic uncertainty and the on-demand economy disrupting the old ways. Millennials want to know, how do you go about disrupting inefficient governments and greedy banks?

How Millennials in Debt represent the New Economy

How long does it take the average college grad to pay off $35,000 with interest? How long would it take you with the cost of living as it is now, on an entry level wage?

This means a lot of Millennials abide by scrapping by, that's all they will have ever known. Research from Citizens Bank is showing that Millennial grads aren't always very literate when it comes to their student loans debt and how their repaying it. 

Of those recent grads who had a number in mind, 11 years was the average length of time that respondents estimated it would take them to dig out of debt.

• These borrowers were in the minority, however, as a whopping 59% reported they didn’t actually know how long it would take them to be debt-free. 

The Debt Generation 

Recent Millennials grads sort of take it for granted that debt is a part of their lives and something they have to fight against. The thing we are taught to do (i.e. to go to college) is one of the major reasons our adult lives take roughly 10 additional years to truly get in order.

This also influences things that people traditionally have counted on, career development, the institution of marriage and the age couples decide to start a family. All of these have economic repercussions on society as a whole. Being in debt, changes your ability to take calculated risks and live pro-actively. Living longer with your parents, delays having agency of your own life. 

 As inflation continues, our current economy is anything but sustainable. We talk about Millennials for their unique work-life emphasis, their love of travel, their mobile fascination, but the bottom line is their freedom is being awfully curtailed due to Governments and the banking industry of older generations.

This makes for a more competitive society where young people are more vulnerable and more disillusioned with big institutions and the profit pyramid as a whole, that exploits the majority, while services the pocket padding of a very slim minority. A young college graduate already is working against an uphill battle. 

College & student loans are cutting into savings, making Millennials live "cheque to cheque", delaying marriage and families for young people.

The Ripples of 2008

This is what I think is a ticking time-bomb for the economy. Many Millennials will opt-out of the nuclear family and consumerist capitalism that enables the kind of endless growth paradigm that bankers, government, retail and high net-worth individuals count on.

Millennials are just asked to deal with it, as if the skyrocketing increases in the cost of housing, food, student loans and other expenses was just normal. 

This isn't just Millennial attitude we are talking about, this is the next reality of the generation and it's only getting worse. A world economy that is based on values where Millennials feel, they are on the short end of the stick of, represents an entire system that will one day be primed to be disrupted. However, in the meantime, these pressures put Millennials at risk, forcing them to choose alternative lifestyles not by virtue of choice, but the dictates of necessity. 

For instance, the amount of debt you have related to the speed you are able to pay it off, has an interesting interaction with your propensity to get married. 

Higher Student Loans are Changing Lives

52 percent of people who got their bachelor's degrees were married, compared with  just 39 percent of college dropouts with debt

1. Student Debt Seems to Dampen house ownership and home buying

2. Young People Are Delaying Starting Families

3. Millennials Are Saving Less Than They Could Be

4. College Loans Make It Hard to Be Financially Healthy

It's not just financially healthy, Millennials crave learning experiences, travel and opportunities that massive student debt means they cannot afford. This leads to less freedom to do what our young people should be able to do, what other generations took for granted. Millennials are forced to lead mobile lives, that may forever change the way professionals see stability and manage work-life balance of priorities

 #IfIWere22 I'd recognize the cost of a college education does not always translate to the benefits of former generations and that financial literacy is really important to achieve balance and success in my future. 

Among the college-educated, a staggering 81% have at least one source of long-term debt.

This is the legacy that we have given our children, an economic system that is so poor to young people nowadays, they are seriously questioning the health of the entire system. But is the banking system and are financial institutions even listening? Perhaps FinTech startups will offer better tools than the banks can, I wouldn't be surprised. 

How do rising student debts, the lack of affordable housing and rising inflation (cost of living) influence the Millennials and GenZs you know?