25% of Young Americans Putting Off College Due to Costs

Written by adminAugust 12, 2019
Student Loan Consolidation

Currently in the United States, 44 million Americans owe $1.56 trillion worth of student loan debt. This is a number that is set to continually rise and hit the $2 trillion mark in the next few years. Everyone knows that were at a crisis level with student debt, yet colleges don’t care. They continue raising tuition through the roof and is forcing many young millennials to think twice about going to college.

TD Ameritrade worked with The Harris Poll to take a look at the impact of the student loan crisis and how it was affecting students today. This amount of debt is doubled only in the last decade. This is the first time we’ve really seen this change to where debt is accumulating more rapidly than it ever has before. In a short amount of time.

The pull over 3000 students from the youngest two generations, Gen Z who is entering college for the first time, and younger millennials who are nearing graduation. The study was called the 2019 Young Americans & College Survey. Looked at finding out whether there’s been a major attitude shift towards going to college. Of course, the answer is yes, there’s been a massive shift.

We used to believe that when she graduated high school you went on to college. Going to college was necessary and it was expected that you do so. Not going to college equated to making much less money and being one of the poorest Americans living paycheck to paycheck. There was no understating the value of a college education.

The Massive Shift

As the Great Recession hit the economy over the past decade, many millions of Americans found themselves without work. They thought would many people do when they graduate high school. They’re desperate to find work and felt that the only good, quality work out there required degrees. The problem is, colleges knew that people were desperate to make more money.

Many schools have been caught lying and making promises about job placement rates. They pushed ads into the American mainstream and it enticed millions of people to go back to school. When it was found that of the schools lied about their job placement rates to get more people in the door, that this meant that there are more people with outstanding student loan debt and no job to pay for it.

While this is happening, colleges are raking in billions and billions of dollars. They keep dramatically increasing the cost of tuition while siphoning off money from the government. It’s almost as if the entire education system decided to become crooked and value profit over anything else. The youngest generations are seeing this happen and are deciding not to stand for it.

Putting Off College

While college is still seen as a must after high school by most, it seems as if the shift is starting to take place. 25% of young students are deciding to put off going to college according to the survey. The main reason why this is happening? Cost. 1-in-5 don’t believe they’ll ever go to college. It’s not worth the investment for them.

Going to college is almost the equivalent of financing a brand-new car. You find yourself tens of thousands of dollars in debt and making payments, including paying attentional interest, for the next 10 to 20 years of their lives. This type of arrangement is hurting millions of lives, as many young adults are putting off making major life decisions, like getting married and having a baby. They simply cannot afford to do anything but live as cheaply as possible while paying off their student debt.

 “There are some students who are saying a four-year traditional degree may not be for me,” Dara Luber, TD Ameritrade’s Senior Manager of Retirement, told Yahoo Finance’s YFI AM on Tuesday. “There’s always going to be a need for those who go to trade schools. So, there could be a shift in how you’re approaching life after high school.”

This study found that 20% of all young millennial’s out there have over $50,000 worth of student loan debt. The students are also expected to be paying off this debt well past the age of 50. That shows that there are less people able to pay their debt and more were going into default.

“More students are seeing the need to not only go to college, but I think part of the increase in the debt is also the need or the feeling that you need to go on to go to grad school to achieve the right job,” Luber said.

“They [parents] understand what it is to have to pay back those loans, and how much it could impact not only for themselves, but for their students, future retirement savings, being able to buy their first home, get married, and have children. All those downstream impacts of having to pay back their student loans when they get out of college,” Luber said.

Read More

One-Fourth of All Americans Think They’ll Never Be Able to Retire

Written by adminMay 25, 2019
Saving

Times are surely changing in the United States and not for the better. While the economy is roaring back to life after a decade-long recession, it’s not good news for everyone. There’s still a lot of income inequality and massive quantities of debt. Social Security is being drained out. The cost of living is rising while incomes are staying the same.

$20 used to buy you a lot more at the grocery story just a few short years ago. Gas prices are one crisis away from jumping past $3 and even $4 per gallon. All of these struggles and worries combine and prevent average Americans from being able to save any money. They can’t afford healthcare costs or insurance. Prescription drugs are too expensive.

And because so many people are living paycheck-to-paycheck, they worry about a lot of things. Retirement is one of them. If you can’t save money for retirement, you’re going to be worried about whether you can retire at all. In fact, one-fourth of all Americans already think they’ll never be able to stop working in their lifetime.

According to a study from the Economic Policy Institute, more than one-fourth of the population should be more worried about retirement. Over one half of working people have absolutely nothing saved up for retirement at all. Many apparently think they’ll be able to make up the difference at some point. They’re deluding themselves if they think they will.

Debt is a Major Driver in Preventing Retirement

There are several things that contribute to this lack of saving for retirement. Healthcare costs, longer lifespans than previous generations, and other issues can creep in. But the main driver is debt. Americans can barely afford to live on a typical salary and take out hefty loans throughout their lives. These loans have high interest rates and are difficult to pay back.

Maybe we can afford all of our bills, but many Americans borrow more than they can afford. If interest rates rise, then it hits the economy like a ton of bricks. One study from the Transamerica Center of Retirement Studies reveals that 66% of U.S. citizens say they’re biggest concern in life is paying off their debt.

The study also revealed that paying off debt is a major priority over saving money. “Retirement is all about cash flow. In my mind, it doesn’t matter what your income is. It doesn’t matter what your portfolio size is,” retirement expert Bill Losey told Bankrate. “It really all boils down to habits: having a plan, being frugal, making sure that you have a debt reduction plan.”

It’s so much debt, it’s difficult to pay off in an entire lifetime. Americans expect they’ll be paying the debt well into their golden years, forcing them to work longer than expected. That can be a difficult thing, as companies often like to replace older workers with faster, younger, and cheaper employees.

Retirees Aren’t Ready for Healthcare Hikes

If you think healthcare is expensive when you’re a young adult or even middle aged, you haven’t seen anything yet. It’s much more expensive when you’re at retirement age. It’s common sense. We get older, our bodies start falling apart more. We might be fine for a while, but eventually, our age always catches up with us.

Women in particular have it rough. They pay more in healthcare throughout their life than men do. They also live longer than men, so they spend even more money on healthcare and retirement then men do. In a lot of circumstances, women leave it to the men to budget the money and save, leaving them in a massive hole.

It’s really difficult to know what to expect when you’re older. Maybe we can look at family history and expect some health issues, but most people don’t. They don’t save or plan for accidents. They don’t have a rainy-day fund. Worst of all, they don’t save much for retirement at all, expecting it to be covered later.

Retirees Are Scared

As we continue to age, more Americans start feeling the retirement crunch. They begin to feel as if they won’t have enough money to last the rest of their life. What happens when they officially run out of retirement money? This is a real fear that’s growing. Retirees are becoming increasingly scared of running out of all their money before they die.

While this is going on, it’s going on quietly. The rest of us aren’t really as concerned about it. Statistically speaking, we’re showing we don’t really care to save money for retirement. More studies are coming out all the time proving that we don’t put our money where our mouth is. Short-term goals constantly take precedence over long-term goals and it’s hurting us.

Why save when we want that giant house or brand-new car? There are credit cards we need to max out buying stuff we really don’t need or care about once we have it. It’s this thinking that desperately hurt us later in life. We get to the point where we realized just how much money we wasted and regret not saving more. 68% of millennials have no retirement plan.

“Many people today are outliving their assets because they did not include retirement in their long-term financial goals,” says Doyle Williams, an executive at COUNTRY Financial. “Americans need to seek financial guidance now so they can eliminate the fear of never being able to retire. By taking some simple steps almost everyone can put a plan in place to secure their financial future.”

A World Economic Forum Study

A new study from the World Economic Forum bares all of this out. We’re living longer than we anticipated. “The key driver of the challenges facing retirement systems is increasing life expectancy and a falling birth rate,” the study says. “This leads to a smaller workforce supporting an ever-growing population of retirees.”

“The lack of awareness of the basics on how interest and returns will compound over time, how inflation will impact savings, and the benefits of holding a broad selection of assets to diversify risks means that many individuals are ill-equipped to manage their own pension savings,” WEF says. “Some groups are particularly vulnerable, including women, the young and those who cannot afford, or choose not to seek, financial advice.”

Read More

Americans Are Still Struggling to Afford Basic Needs

Written by adminMay 23, 2018
Saving

Early last week, the United Way released a staggering report about the condition of the average American family. In it, it was revealed that 51 million households in the United States, about 43%, still can’t afford to take care of their basic needs.

These basic needs include food, health insurance, rent, transportation, and a cell phone.

The same study declares that 16.1 million households in the U.S. are living below the poverty line and 34.7 million who are considered limited income families, making less than what is required to pay the bills.

Several states have it worse than others. California, Hawaii, and New Mexico, for example, have half of their populations struggling to make ends meet. It’s difficult to imagine.

66% of workers make less than $20/hour, which means the large majority of people have very little, if anything, in their savings. If something bad were to happen, most Americans don’t even have access to $400 if they needed it.

If we break it down to the country level, then we start to see the discrepancy. Many counties in the U.S. are simply too expensive to live in. Not too long ago, a map of the country came out showing how much you had to make in each state just to cover the basics. A lot of the states were between $50,000-$80,000!

To make it in Seattle’s King County, you’d have to make over $40/hour to live there. If you weren’t bringing home $85,000 per year, you were living in poverty.

The homeless problem is so bad in Seattle, the city council just implemented a controversial tax on companies like Amazon to help get the homeless off the streets. Life is so expensive in San Francisco that the homeless line the streets for miles. There are literally apps that show you were to avoid human feces on the sidewalk due to the homeless situation in their city.

The economy is getting better and jobless numbers are going down, but it’s not enough. It doesn’t matter much if someone has a job if they aren’t making the money they need to even feed themselves.

There’s a reason why debt has reached all-time highs. People are borrowing more than ever just to catch up, but can’t afford to pay it back.

Read More