A pair of studies highlights the debt problems facing millennials. The first, conducted by Ohio State University, highlights the risks of poorly managed credit card debt and its potential effects on long term financial health:
The real culprit is credit card debt, which tends to stifle economic growth of younger Americans, primarily because they pay it off so slowly, the OSU study says. But millennials are paying off all their debts so slowly they may accumulate credit card debt well into their 70s and die still owing, researchers say.
“If what we found continues to hold true, we may have more elderly people with substantial financial problems in the future,” says Lucia Dunn, a lead author of the study and an economics professor at Ohio State.
A second study, sponsored by Wells Fargo, indicates that 54% of Millennials say debt is the issue that keeps them up at night. Furthermore,
Another 42% of younger Americans say their debt is “overwhelming,” double the percentage of baby boomers who feel the same way. And 51% of millennials say they aren’t saving for retirement, primarily because they just don’t have enough extra cash to start a savings program. Any extra cash they do have needs to go to pay down debt, 81% of millennials say.
To no surprise, student loan debt is a major culprit in driving debt angst:
The trouble starts in their early 20s, with ever-skyrocketing student loan debt, Wells Fargo reports. More than 64% of millennials funded their college education through loans, compared with 29% of baby boomers. The report cites statistics from the Consumer Financial Protection Bureau, which estimates total student loan debt topping $1 trillion last year, far and away the highest figure ever for U.S.-based college loans.
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