Over the last few years I have been hearing a lot of negativity towards my generation, the Millennials. We are adults ranging from ages 19-35 (source: Chase). I have heard that we are poor employees, have a lot of debt, selfish, we are spenders, we don’t budget, we aren’t productive members of society, we are lazy, addicted to our phones, etc. etc. Personally, I do not get worked up when I read articles talking about the above mentioned, because I know this to be opinions and not facts, except addicted to our phones, but really, what generation isn’t addicted. Over my next few blogs I plan to make a positive case for my generation and why we are going to change the world … for the better.
The issue that is on everyone’s mind, including ours, is student loans. Listen, we know that we carry a lot of student loan debt, and I mean A LOT. The average millennial owes $41,286 each (source: Bloomberg). That is $41,286 per person aging between 19 and 35! I would be lying if I stated it wasn’t a problem. But, I would also be lying if I said the same problem won’t be shared by Generation Z or wouldn’t have been there for Generation X if their college costs were increasing at a similar rate. The cost of college has increased at a rapid rate over the last 20 years compared to the previous 20. From 1995 to 2015, in state tuition and fees at national public universities grew 296%! (source: US News). 296% or close to 7% a year! C’mon, who wouldn’t be in debt at those prices? On top of this, most of my generation came out of college post “Great Recession,” when starting wages and overall employment were at lows not seen for decades. On top of this, Sallie Mae and other lenders hit us with 5-7% interest rates on our outstanding balance. We are supposed to make it through college with costs rising 7% per year, then get a job paying the lowest salary it has ever paid, then work to pay off loans at 7% interest.
These three circumstances make it extremely difficult for my generation to get ahead, to be productive members of society, but we are still managing to push forward. My generation has managed to lower debt in every other category except student loans (source: Washington Post). We have lowered our overall debt in credit cards, which I believe to be the most important and the number one way families can struggle, and our current auto loans and mortgages are lower than they were in 2003 (source: Washington Post). Studies show that baby boomers and generation X are adding more personal debt than us millennials. (source: Federal Reserve Bank of New York Consumer Credit Panel). We do have a lot of student loan debt but through budgeting and keeping other debts low, we can make the payments and push forward as productive members of society. In part 2 I will discuss how we are the best budgeting generation and have more savers than spenders, which may seem shocking to hear but true.
To pay off your student loans faster ------- Call your student loan provider and set yourself on the lowest monthly payment plan. This will push your loans out for the maximum number of years and look like you are paying a lot more money, but don’t be scared. The trick is you must set your payment plan to auto draft the minimum payment monthly. When this is processed with your loan provider, they will direct most of the payment towards interest and little to principal, which is bad. But don’t worry! After your auto draft is processed, log in to your loan account online and make a second payment towards the highest interest rate loan. 100% of this payment will go towards principal. Do this every month or with any extra money you want to put towards loans. Once the highest interest rate loan is paid off, move on to the next highest, then so on and so on until they are all paid off.
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