The Millennial generation gets a lot of flak, but is it actually warranted? Often pegged as lazy and entitled, Millennials actually highly value hard work and education, surveys have shown. Unfortunately, hard work and education aren’t getting them as far as it did previous generations; Millennials face greater financial burdens with rising education costs, crippling student loan debt and stagnant wages. As the costs continue to soar and Millennials take on more debt, it’s little wonder that many of them experience financial anxiety. One study found that 74 percent of Millennials surveyed feel daily stress related to their student loan debt. American Financial Benefits Center (AFBC), a document preparation company, recognizes that Millennials face tough financial challenges in today’s economy and reminds student borrowers that there may be options to help.
“We hear all the time that it’s gotten harder to make ends meet,” said Sarah Molina, manager at AFBC. “When you look at the statistics, it becomes clear that this isn’t an exaggeration.”
Higher education has become increasingly expensive; since 1980, tuition has risen nearly 260 percent. The rising costs and loan interest have made it more difficult for Millennial borrowers to pay off student debt than it was for previous generations. Baby Boomers, for example, would have had to work 306 hours at a minimum wage job, adjusted for inflation, to pay for four years at a public college; Millennials have to work an average of 4,459 hours in comparison. Millennials also have 300 percent more debt than their parents, the majority of which consists of student loans. Many Millennials with student debt have a net worth of –$1,900; they owe more than they own. In addition to shouldering monumental student loan debt, they face other financial challenges with increases in housing and medical costs, as well as lower wages.
“It’s easy to take on student debt without realizing how much it will impact you later,” said Molina. “After graduation, the reality of having to pay off the debt sinks in and many young people feel overwhelmed trying to balance loan payments with other expenses.”
According to a study conducted by Northwestern Mutual, approximately one-quarter of Millennialssay that their financial anxiety affects their job and makes them feel physically ill, compared to 12 percent of Boomers or Gen Xers. A quarter of them also said that it affects their relationship with their significant other and causes them to miss social opportunities. Furthermore, 18 percent of Millennials said their financial anxiety caused them to feel depressed on a weekly basis. Adding to the stress, many Millennials don’t know the details of their loans or even how long it will take to pay off their debt. For Millennials with federal student loan debt, income-driven repayment plans (IDRs) may be a helpful option to reduce some of the financial stress. By taking into account a borrower’s family size and monthly discretionary income, loan payments can be recalculated to what should hopefully be a more manageable amount.
“We feel young people should be able to have options for paying off their loans so their financial anxiety can be lessened,” stated Molina. “AFBC is happy to play a part by offering services like assisting our clients in applying for IDRs that may reduce some of the financial burden.”