If you’ve been paying attention to the headlines lately, you know student debt has become an epidemic. It’s forcing many people to delay life decisions. Millennials are particularly vulnerable, as they are the age group who endured the worst of it. During the last decade, the Great Recession has raged on.
While carrying the heavy burden of student loans, it’s forcing millennials to carry personal loans as well. In today’s economic climate, jobs have been sparse. For-profit schools are under major scrutiny for predatory lending schemes. And for the first time ever, student loan debt has hit $1.5 trillion.
All of these major issues combined have caused a perfect storm of frustrating circumstances. If you find yourself in a position where money is short and you have a need, taking out a loan seems like the only option. The problem is, it’s putting people further in a situation they can’t dig themselves out of.
If you’re suffering under the burden of student loan debt, give Financial Helpers a call. We’d love to hear from you. We’ve helped thousands of people find out if they’re qualified for student loan forgiveness and get them enrolled in a plan that works for their budget. You can reach us at:
Student Debt Borrower Data
According to LendingPoint, a personal loan provider, millennials are taking on their fair share of extra debt. This debt is just as volatile as student loans with fixed interest rates, high late fees, and more. Millennials are taking out these high-risk loans to pay for emergencies, weddings, and other things they simply can’t afford.
Just a couple of years ago, into 2015, only 12% of borrowers were millennials with student debt. Since then, the number has more than doubled to just over 25%. By the second quarter of 2018, the number of personal loans taken out at a rate of 17.5% higher than the year both. That totals to around $125.4 billion.
“Millennials are driving the borrowing,” said Mark Lorimer, chief marketing officer of LendingPoint. “They are rapidly coming into their earnings and credit wheelhouse. It takes time to become creditworthy and we’re seeing a higher proportion of millennials getting there.” Despite the rate of debt going up, it’s not something millennials take for granted.
“Millennials don’t like credit card debt as much as boomers did,” said Lorimer. “They’ve seen their parents run into difficulty with compounding debt.”
How to Borrow Responsibly
If you have a lot of student debt, you might think you have no other choice but to get a loan. What you need to remember is there’s a huge difference between cleaning your budget and over your head in massive debt. Student debt alone can hang over your head for a decade or longer. Here’s some advice:
-Only borrow what you can afford. Don’t have the expectation that one day you’ll make more money, so it’s okay to take out a large loan. If things don’t go as planned, you’ll get behind on payments and go into default.
-Don’t borrow more than 36% of your gross monthly income for housing and debt. This is called the ‘back-end ratio.’
-Considering what you’re borrowing for. If you have a lot of student debt, it’s not worth the extra debt and costs to get a loan to pay for a huge wedding. You might think it is, but don’t realize the pain that will come later. It’s better to save, budget, and plan for the wedding instead.
-Address your spending habits. This always seems like the last step someone takes. They don’t look at their spending until things are already going down the tubes. If you really want something, don’t pile on more debt. Cut spending and save money.