I Feel Bad For Millennials, They Don’t Have A Chance
I’ve noticed a scenario lately that seems to be getting worse each year for our young people: It has become nearly impossible to get a good job and be “well-off” self sufficient as a millennial without having well-off parents before you.
Consider this – A white male is 22 years old today. His parents had no money in savings. He wanted to go to college, but the only way to do it was student loans or working. The average cost of living on campus at a 4 year public school in a typical mid-western state is about 22,300 per year, taking on campus living with meal plan and books into account. So he took out student loans, to the tune of about 90,000 over 4 years. He graduated at 22, didn’t find a girl at school to marry so he’s on his own for now. Because he wasn’t a minority or had any sort of disability, he had no assistance in his school cost.
He starts to look for a job. He must find one within 6 months of graduating to begin paying back his student loan. Because he had no credit and because his parent had no money, the interest rate on the loan is 6% (this is pretty standard and sometimes much worse). He will pay $1000 a month when the repayment starts.
In his job search for a good paying blue color job (40k+ to start), he comes across multiple applications that require a facebook profile link and a linked in profile link. If he doesn’t have a Facebook or linked in, he isn’t getting hired. If he has it all private, he isn’t getting hired. If he has too many pictures and stories of his college days, he isn’t getting hired. If he has made comments about how much he supported trump during the campaign that are easily found via a google name search, he isn’t getting hired.
He finally finds a job in information technology, which he studied at school. He starts off with no experience and is making 45k a year, or about 3900 a month. After taxes and health insurance, he’s bringing home about $2600 a month.
$1000 of that is gone to student loans. That leaves $1600 a month. He needs to look presentable and purchases a decent used car for $12,000. That costs him $200 a month, down to $1400 left. Add car insurance at $100 a month, $1300 left. He needs to eat, so $150 minimum per month to not be down to bare bones. $1150 a month left. He needs a place to live of course and finds a decent apartment in a good neighborhood, which will cost $900 a month, plus renters insurance, which is $100 a month. Down to $150 left. Interested in savings some cash? Going out with some friends occasionally? Purchasing a few entertainment items or furnishing items? Forget it. The only option left is to get a credit card and start racking up debt on it, which will will be hard to pay down or off without a significant raise.
So what are the options? First, the young man could have skipped college and the student loans. This would save him a significant expense over the next 10-15 years that amounts to 120k worth of debt that was never taken on. Second, he could get married. While this potentially doubles the loan debt if the person he marries is in the same boat, it could also allow a cut to living expenses and such in half, making it at least a little easier. Third (the most popular option), he could move back in with his parents. It would take several years to build up funds that aren’t used toward housing and insurance, but at least he wouldn’t be flat broke at all times. Fourth, he could attempt to make it on his own as described above and basically be broke all the time. There is a great chance his student loans will go into default as he finds it a burden to pay them each month, and the cycle of debt begins, with no ability to remove them from bankruptcy. Fifth, he could have been born to well-off parents. If his parents could have paid for his college tuition, he would be in much better shape.
In conclusion, for those of you that say millennials are babied and coddled, entitled, and doing this to themselves, think about how many millions of people right now from 22-34 or so are in this boat. There is a reason the student loan debt bubble is so huge now. The only chance they really have is to either be smart enough not to take student loan debt, even if it costs them jobs at large firms that essentially now all REQUIRE a degree, or they must have been born to a rich family. It’s such a shame we are doing this to an entire generation of kids, but it’s going to make the next 30 years or so a real challenge for us all when the next great recession hits because of it, only this time no one will have the funds to “buy our way out of it.”