Financial Anxiety Takes a Toll on Millennials
Unfortunately, the age-old edict of “education and hard work is all it takes to succeed” is no longer the case for many millennials, who are burdened by soaring tuition costs, student loan debt and stagnant wages. The trend has led to an increasing amount of financial stress among millennials, with 74 percent feeling daily stress related to their student loan debt, according to a recent survey from the American Financial Benefits Center (AFBC).
The facts prove millennials’ anxiety is warranted. According to the AFBC, since 1980, the cost of higher education has risen nearly 260 percent, making it more difficult for millennials to pay off student loan debt compared to 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; conversely, millennials have to work an average of 4,459 hours.
Millennials are also carrying 300 percent more debt than their parents, the majority of which consists of student loans. The AFBC reports that many millennials with student debt have a net worth of -$1,900; in other words, they owe more than they own. In addition to student loan debt, they are also burdened with rising housing and medical costs, and wages that don’t match up.
A large source of the anxiety surrounding the student loan debt is a lack of education and understanding, with many millennials reporting that they don’t know the details of their loans or how long it will take to pay them back. For millennials with federal student loan debt, income-driven repayment plans (IDRs) may be a helpful option to reduce some of the financial stress, says the AFBC. 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.