The Millennial Perspective: The Cost of Learning

I’m sure we have all heard of student loans the mountains of debt that come with them. Every generation has or has had student loan debt. Millennials, surprisingly, don’t have the highest average amount of student loan debt though. However, I think that we may have the hardest time balancing the debt with other aspects of being an adult. When people in Gen X, the generation with the highest average amount of student loan debt, were accumulating that debt, many Millennials were still learning to read and the cost of goods across the nation were a lot cheaper than they are now. Housing was cheaper making it easier for the generation before us to invest in a home following graduation. Food and gas were a lot cheaper too. Tuition, on the other hand, was starting to rise.1

According to Business Insider, the cost of tuition has increased 260% between 1980 and 2014. In dollars, this equates to $9,438 for four years including room and board to $23,872. Along side this, inflation has seen an increase of around 120%. Now let’s look at the cost of minimum wage. In 1980 minimum wage was $3.10 and increased every couple of years until it stopped increasing in 2009 when it reached $7.25. While this is a significant increase in terms of percentage, it has not kept up with the cost of consumer goods and it certainly hasn’t kept up with the cost of tuition. This has caused the Millennial generation to fall behind on getting a real start on life.

Like any type of loan, student loans come with an interest rate and different types of loans have different types of rates. Federal student loans issued by the Department of Education range from 3% to 6% interest while private student loans issued through banks, such as Discover or Wells Fargo, start at 8% and go up from there. The process of getting federal student loans can be difficult for some and this struggle can be caused by a number of things. For some, their parents or guardians may make too much money to allow them to qualify for any financial aid until they are 24 years old, married, or have a child. Others may have done poorly in their courses causing them to lose their eligibility. In these cases, the options to pay for school are left up to scholarships, cash, private loans. The repayment options for these different types of loans differ greatly as well. With federal loans, you can often be placed on an income-based repayment system allowing for your monthly payments of the total sum of your loans to match your income. On the other hand, private student loans do not have this option unless they are consolidated. A new private loan is issued per semester and typically has a $50 monthly payment that starts after graduation, meaning that you could be looking at a $400 a month payment after graduation. Regardless of the type of loan or the amount of the monthly payment, it can be difficult to get these loans paid off in a reasonable time frame and get a start on building a life because of the lack of increase in income for new graduates.

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The Millennial Perspective: My House, My Rules

Picture it: a nice starter home with a yard for children and pets to run and play. A place for you to gather with family and friends. A place to call your own. Many millennials dream of buying and owning a home, but how many actually do? According to Urban Wire, the most recent study on this was conducted in 2015 when the youngest millennials were 18 years old and the oldest were 34. At that time, only 37% of millennials were home owners. Now, five years later in the year 2020 I am sure this number has grown considering most millennials are past college age and heading towards their 30s and 40s. However, I decided to conduct a study of my own and ask my fellow millennials about their home buying experience, if any. 

I asked my friends a series of questions:

  1. Do they own a home or have they ever owned a home?
  2. If so, what was their buying process like?
  3. If not, what is holding them back?

Several people that responded do, indeed, currently own a home and a few of the older millennials are even in their second home. Some of them qualified for special loans which allowed them to make the purchase without a down payment. Others saved just about all they could manage to make their dream come true even if it took several years and some had help from their families. Those that do not and have never owned a home gave a good list of reasons that seem to be a general consensus for a lot of millennials. From that list, several stated that they haven’t purchased a home yet because houses are too expensive. They would rather save until they find a home that they love at a price point that works for them than buy a house at what they could afford, but want to upgrade it or even buy a newer home within a few years. Some also stated that they don’t know where they want to end up, they aren’t married and don’t have kids yet and want to make sure that when and where they buy is just right.

Being a millennial comes with a lot of uncertainties. A lot of us are in the turning point of our lives where we transition from college age to being a “real adult.” We want to make plans and live a life that we deserve, but at the end of the day, life gets more and more expensive and the job market and average income can’t compete. Now we have lived through and will certainly feel the repercussions of two financial crises for many years to come. However, all this being said, the current trends for the housing market predict that another housing market crash may be imminent, but it could open up the opportunity for many people in my generation to finally be able to say those famous words that our parents shared with us many times, “my house, my rules,” so long as the job market and income allows. 

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