What many are calling a full-blown financial crisis is still only getting worse. As of 2010, the total amount of debt from student loans surpassed the total amount of outstanding credit card debt, according to data from the Federal Reserve Bank. Student loan debt is much higher and held by many more individuals today than at any point in the past. The primary causes for this large amount of debt accumulation are three-fold. On one hand, a college degree is considered more and more essential for those who wish to acquire a job that pays a living wage.
At the same time, college has become more expensive than ever. The average tuition in the U.S. in 2016, according to data from The College Board, ranged from $9,410 per year for in-state public schools to more than $32,000 per year for a private university. To meet the demand for a degree in the face of rising costs, many are turning to student loans, which have become easier to secure than in the past. However, with this ease of credit access has come a prevailing trend of crippling debt for many young graduates.
Millennials still feel stuck
But recent studies now show that this debt is cutting across generational lines. Research from PriceWaterhouseCoopers has shown for the fifth year in a row that student debt has contributed to millennials feeling ill at ease about their financial futures. PwC’s survey found that around 55 percent of millennials did not feel they had enough savings to afford a financial emergency, and 37 percent felt their retirement was in jeopardy because of student loan debt. A staggering 81 percent of young workers said they were “constantly stressed” about their financial situation.
“Millennials and their parents are concerned about their financial futures.”
This is also affecting their parents’ ability to save for their own financial goals, according to the survey. In fact, a larger proportion of baby boomers reported they were concerned about their financial future than millennials did, and researchers believe this is largely due to student loan debt. Parents often feel an obligation to help their children pay down debt, especially since they may have consigned the loans. However, this often comes at the expense of the parent’s own financial health.
With these new challenges, the importance of sound retirement planning becomes even more pronounced. By connecting with an advisor or financial planner, millennials and their families can get on track toward a debt-free future.