Debt is one of the biggest financial problems millennials are currently facing. Recent studies show that a sizable portion of millennials are in debt, which can substantially affect their financial security.
The most recent data and information on millennial debt, including credit card debt, vehicle loan debt, and other sorts of debt, will be examined in further detail in this article. Also, we will investigate the causes of millennial debt and discuss various remedies to assist millennials in successfully managing their debt.
Factors contributing to millennial debt are rising college costs, flat wages, lack of financial knowledge, and high living costs in many cities.
Overview of Millennial Debt
Before we can figure out how much debt millennials have, we need to look at the kinds of debt they usually have. Student loans, credit card debt, and auto loans are the three debt categories that millennials are most likely to have.
The Federal Reserve Bank of New York’s most recent statistics shows that as of the end of 2022, there was $1.73 trillion in total outstanding student loan debt in the US. With 63% of borrowers under 40, millennials control most of this sum. Borrowers’ average student loan debt is $36,447.
The nation’s total outstanding credit card debt was $1.08 trillion as of the end of 2022, making credit card debt another significant source of debt for millennials. The bulk of people with credit card debt is millennials, with 56% of borrowers under 40. Each borrower has an average credit card balance of $5,315.
Total outstanding auto loan debt was $1.37 trillion as of the end of 2022, making it common among millennials as well. The average auto loan balance per borrower is $20,184, and 31% of borrowers are millennials.
In general, millennials are heavily indebted; as of the end of 2022, there will be $4.39 trillion in total consumer debt, including credit card debt, auto loans, student loans, and other sorts of debt. This is a rise of 5.6% from the previous year.
Student Loan Debt
One of the millennial’s biggest causes of debt is student loan debt, which can negatively affect their financial security. According to the most recent data from the National Center for Education Statistics (NCES), 41% of millennials between the ages of 22 and 37 are in debt on their student loans, with an average debt of $37,584 per borrower.
According to the most recent data from the Department of Education, the overall student loan default rate in the United States was 8.7% in 2022. Repaying student loan debt can be a substantial issue for millennials. Even more borrowers in the millennial generation defaulted on their debts, with a rate of 11.1% for borrowers between the ages of 25 and 34.
Credit Card Debt
Credit card debt is another significant source of debt for millennials, which can hurt their financial security in a big way. The Federal Reserve’s most recent statistics show that the average credit card debt for borrowers in their 20s is $5,315.
Due to high-interest rates, it may be hard for millennials to pay off their credit card balances, leading to more debt and stress. According to the most recent numbers from the Consumer Financial Protection Bureau, most credit card complaints come from people in their 20s and 30s. These problems include high-interest rates, illegal transactions, and billing disputes.
Auto Loan Debt
Another important source of debt for millennials is auto loans, with the average balance per borrower being $20,184, according to the most recent data from the Federal Reserve Bank of New York.
The Federal Reserve’s most recent data show that the number of people who don’t pay back their auto loans keeps increasing. This can make it hard for millennials to repay their auto loan debt. The default rate for vehicle loans increased from 3.8% to 4.08% at the end of 2022.
Other Types of Debt
In addition to credit card debt, auto loans, and student loans, millennials also have personal, medical, and payday loans.
The Federal Reserve Bank of New York’s most recent statistics shows that as of the end of 2022, there was $320 billion in total outstanding personal loan debt in the country. With 38% of personal loan borrowers between 18 and 29, millennials are a big part of the personal loan market.
Payday loans are also standard among millennials, and according to the Consumer Financial Protection Bureau’s most recent figures, they are a significant source of consumer complaints. These loans may have high-interest rates and fees, resulting in a vicious cycle of debt and money problems.
Factors Contributing to Millennial Debt
- Factors contributing to millennial debt are rising college costs, flat wages, lack of financial knowledge, and high living costs in many cities.
- The National Center for Education Statistics’ most recent data shows that the average cost of tuition and fees at public four-year schools grew by 1.1% from the previous year. Increasing education expenses are a significant factor in millennial debt.
- The latest data from the Bureau of Labor Statistics show that salaries have been flat over the past ten years, another critical factor in millennials’ debt. Because of this, it may be challenging for millennials to keep up with increased living expenses and debt repayment.
- Financial illiteracy is another crucial factor in millennial debt. Studies have shown that many millennials need to learn how to handle money in the most basic ways. They may need help managing their debt and making wise financial decisions.
- New data from the Census Bureau shows that the high cost of living in many cities, which has been slowly increasing over the past ten years, can also be a factor in millennial debt. This may make it difficult for millennials to build emergency savings and debt repayment plans.
Solutions to Help Millennials Manage Their Debt
- Many ways to help millennials handle their debt successfully include offering financial education, expanding access to affordable housing, and enacting laws encouraging student loan payback.
- Teaching millennials about money makes them more likely to make intelligent choices and responsibly handle their debt. This can be accomplished through institutions, including workplaces, communities, and schools.
- Since housing costs cause a lot of stress for many millennials’ finances, making it easier to find affordable housing can also help them deal with their debt better. This can be done by making laws that make housing more affordable, like giving more money to low-income housing and putting rent controls in places where housing is expensive.
- Millennials can handle their debt well if policies encourage them to repay their student loans. This can be done by implementing programs like loan forgiveness, repayment plans based on income, and refinancing options with lower interest rates.
- Millennials can also make a budget, consolidate their loans, and talk to financial experts to figure out how to handle their debt correctly.
- With the overall amount of consumer debt outstanding reaching $4.39 trillion by the end of 2022, millennials have a sizable obligation.
- With 41% of millennials aged 22 to 37 having student loan debt and an average debt of $37,584 per borrower, student loan debt is one of this generation’s-gest sources of debt.
- Studies show that many millennials need basic financial knowledge and skills, which is a big reason why so many are in debt.
- Since housing costs cause a lot of financial stress for many millennials, making it easier to find affordable housing can help them deal with their debt better.
- Solutions, including offering financial education, expanding access to affordable housing, and implementing regulations that encourage student loan repayment, can be introduced to assist millennials in managing their debt successfully.