Millennials Are $1 Trillion In Debt, Mostly For Student Loans
For people born between 1981 and 1996, it’s the highest debt exposure since late 2007, the beginning of the global financial crisis,
Americans ages 18 to 29 had more than $1 trillion of debt at the end of 2018,
according to the New York Federal Reserve Consumer Credit Panel. That’s $1,005,000,000,000. When was the last time you saw that many zeros?
Possibly concerned about student loans and job prospects, younger adults under age 35 have cut back on their spending compared with previous generations, according to a University of Michigan survey, Bloomberg reported.
Less spending means less economic growth, and policymakers are paying attention. They have introduced several policies to boost millennial spending such as student loan forgiveness, according to Richard Curtin, director of the University of Michigan consumer survey.
Listen to GHOGH with Jamarlin Martin | Episode 39: Tunde Ogunlana Jamarlin talks to family wealth advisor Tunde Ogunlana, CEO of Axial Family Advisors, about estate planning and Snoop Dogg’s comment that he doesn’t need a will (“I don’t give a f— when I’m dead. What am I gonna give a f— about?”). They also discuss the growing college debt bubble, whether more free tuition will help solve the problem, and why MBAs are like the bachelor’s degrees of 30 years ago.
Student loans make up most of the $1,005,000,000,000 debt, followed by mortgages. New mortgages among today’s millennials are lower than rates in the early 2000s. “This may suggest adults are waiting longer to buy homes and may opt to rent for a longer period of time than previous generations,” Alexandre Tanzi reported for Bloomberg.
Student loans had a record $166 billion in delinquencies in the fourth quarter of 2018, according to the Federal Reserve Bank of New York, Business Insider reported. This means about 40 percent of loans could default by 2023. By comparison, mortgage defaults reached 11.5 percent at the height of the financial crisis.