Young Americans And Debt
May 20, 2008 · Print This Article
Debt is a word that is not often associated with the young and carefree twenty year olds of current pop culture. However, more and more young people are incurring debt for a number of reasons and are doing so at an alarming rate. It is no surprise that college graduates are the ones leading the pack when it comes to debt accumulation. This group of young adults is more likely to find themselves with much more debt then their twenty something contemporaries who have not attended college or university. The new graduates leave college with impressive degrees, and along with these degrees, impressive debts.
College debts for these young graduates can range from a few thousands dollars to several hundred thousand dollars depending on the college and the degree. The average debt for graduating students is around 20,000 dollars though this number is often higher. Students who have attended Ivy League colleges in pursuit of high degrees such as medical or law will find their debt considerable higher, possibly reaching 100,000 dollars. With such a mar on their credit these young adults are finding it increasingly difficult to pay the debt off or to at least make any kind of dent in it.
Along with the considerable student loan debt, twenty year olds are also amassing impressive credit card debt. A recent study has shown that more then 80% of outbound college students have credit cards, most are not even in the work force yet. These credit cards are used for everything from cafe lattes to aiding with the rent. In fact, credit card debt with young adults tripled in the last decade and promises to keep growing at an alarming rate. With so much debt at such an early stage in life, these graduates find that the quest to break even is an uphill struggle. Bankruptcy is becoming a necessity for many, and young adults are now carrying the second highest bankruptcy rate in the country. Filing for bankruptcy at such a young age will have devastating long term effects. These people will find it harder to gain low insurance premiums and deals when it comes to buying a home or making other investments.
There are many contributing factors that lead these young adults into financial crises. When it comes to student loans, many students are finding it harder and harder to actually find financial aid that is suited to their situation. Grants are decreasing while loans are increasing. Coupled with rising tuition prices, students are paying far more for continued education then their parents were twenty or thirty years ago. Once these students leave college and set out into the workforce they find that their desired career path has grown stagnant. The job market, as it were, is creeping to a halt with the only growth being seen in retail and food service. More and more students are finding themselves behind a grill instead of behind a desk.
With minimum wage jobs and large debts young adults are being forced to resort to using more credit cards to help them scrape by. The thought of owning their own home and starting a family is further and further out of reach due in part to increasing prices and the home market being the weakest it has been in quite some time and not to mention the amount of debt they are faced with.
Young adults are carrying an incredible amount of debt, amounts that were unheard of a generation ago. If these debts are not properly taken care of early in life, then many experts agree that the current generation of debtors will have a much harder time saving for retirement funds or having enough in savings to help aid in emergency situations. Now, young people are able to take steps towards recovering from their debt and should start to do so immediately. These steps are often long and time consuming, involving budgeting and saving which many claim are skills that young adults simply do not posses.
More and more financial experts find themselves advising young adults in matters of debt recovery and sustaining a healthy standard of living along with planning for the future. These skills should have been learned at an early age, experts say, yet they are not and so young adults are finding themselves in situations that are unfamiliar to them.
Two popular tips that are given to college graduates and other young adults facing growing debt concerns are setting up retirement options and creating a stable and reliable budget. Retirement funds are shaky in these times and experts are advising that young adults should invest in 401(k)s and IRAs. Along with setting aside money for the future young people should look into a firm monthly budget that cuts out any unneeded expenses.
While young adults are facing considerable financial debt and a decreasing job market it is possible to recover. Although it will take a certain amount of diligence and time.
Related external links:
- Student Debt Help
- Government Direct Loan Homepage
- FinAid’s Student Debt Guide
- Canadian Government Assistance and Information
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