Shayna Pilnick, 28, would like to buy an apartment but can't afford a mortgage.
Jacqueline Mannino, 23, and her boyfriend, Benjamin Prowse, 26, want to get married.
Jacob Childerson, 24, and his wife, Jennifer, 25, wish they could start a family, but they live with Jennifer's parents.
holding them all back: tens of thousands of dollars in student loan
debt. Like countless Millennials across the country, they find
themselves tethered to that debt load, stuck between the desire to
become fully independent adults and not being able to afford the
financial and cultural milestones traditionally associated with young
Rising tuition costs and an anemic job market are
feeding this vicious cycle, as a generation with more student loan debt
than any other is struggling to find its economic footing.
confluence of economic trends makes Congress' impending decision on
student loan rates all the more critical for today's college students.
New federal student loan borrowers may see their interest rates double
unless lawmakers strike a deal to extend a 2007 law that cut the rates.
The law expires July 1.
"You could have generations that never
get in the economic mainstream," says Ted Beck, president and CEO of the
National Endowment for Financial Education. "If you never get into the
whole U.S. economic system because you've been held back by too much
early debt ... we could have a lot of people who just never really come
anywhere near their potential."
A report out last month from the
Consumer Financial Protection Bureau suggests myriad ways in which
student loan debt may be having a ripple effect on the economy. Based on
more than 28,000 comments submitted by consumers and industry leaders,
the report found that debt held by millions of Millennials may be
forcing this generation to:
•Put off home ownership
•Divert money from retirement accounts
•Impede the ability to take small-business loans
•Forgo securing car loans
hard data linking student loan debt to a delay in these financial
commitments are elusive, personal finance experts say that when one is
saddled with any kind of debt, economic lives can grind to a halt. The
consequences of massive student loan debt - a trillion dollars and
counting - could threaten the standard of living for this generation
and harm the country's economic competitiveness.
DEBT VS. INCOME
of college students are graduating into a slowly improving economy in
which many still find themselves unemployed or underemployed. Class of
2012 graduates faced an unemployment rate of 13.3%, though not
seasonally adjusted, according to data from the Bureau of Labor
Statistics, though the rate drops significantly the longer students are
out of school. The national rate, which is seasonally adjusted, is 7.6%.
Project on Student Debt found that two-thirds of 2011 college graduates
- the most recent year for which data are available - graduated with an
average student loan debt of $26,600, or $27,500 when adjusted for
inflation. Contrast that with 1993, when less than half of students
graduated with debt, and those who did averaged $9,350,according to data
from the Project on Student Debt. In today's dollars, that's about
Even so, Mark Kantrowitz, publisher of Edvisors.com,
which runs more than a dozen websites about planning and paying for
college, says today's debt load is manageable.
graduate with an affordable amount of debt," he says, citing a statistic
from the National Association of Colleges and Employers survey that
says the average starting salary for a 2013 graduate is almost $45,000,
exceeding how much most borrowers owe. "Your total student loan debt at
graduation should be less than your annual starting salary. Where there
are problems is when your debt is out of sync with your income."
the case for Jacob Childerson, who has about $60,000 in debt while
making about $28,000 a year as an admissions counselor and recruiter for
his alma mater, Southern Illinois University in Edwardsville, Ill.
Despite graduating with a degree in international business and speaking
fluent Spanish, he hasn't been able to find a job in his field.
year out of college, Childerson says he feels like he can't grow up. He
and his wife have about $92,000 in student loan debt combined, and the
two are unable to buy their own place. They share a car because they
can't qualify for a second car loan, which means carpooling to work and
passing up better job opportunities that might be out of the way for one
"We can't start a family, we can't buy a house, we can't
sort of settle down, I guess," Childerson says. "We can't have that
quintessential American dream."
Over Memorial Day weekend,
Childerson and his wife, Jennifer, who has a master's degree in social
work, moved in with her parents in St. Louis, allowing the couple to put
the $850 a month they had been paying in rent toward their loans. A
week earlier, Jennifer had to turn down a job offer because the pay
increase wouldn't have covered the costs of buying a second car for her
"We don't feel like we can make any of those other steps
until we've got this student loan debt knocked out," Childerson says.
"It's just a noose that keeps getting tighter and tighter."
A BROADER ECONOMIC IMPACT
adults who find themselves living at home - either because they never
left or moved back - are probably contributing to a decline in economic
activity by not forming their own households, says Mark Zandi, chief
economist at Moody's Analytics.
"The more homes that are built,
the more things that are purchased to put in those homes," Zandi says.
"If you don't have households forming, the economy is going to
From 2005 to 2012, the percentage of men ages 25-34
living in their parents' home rose from 13.5% to 16.9%, according to
Census Bureau data. For women of the same age group during the same time
period, the rate of those living at home went from 8.1% to 10.4%, the
Zandi suspects that unemployment is the driving factor in keeping young people in their parents' homes.
loan debt) may mean something down the road when 20-somethings are in
their early 30s and thinking of buying a single-family home," he says.
"But I don't think it's significantly impacting their ability or
willingness to rent. Kids want to strike out on their own."
Chopra, student loan ombudsman for the Consumer Finance Protection
Bureau, says the group's report is not a scientific survey attempting to
pinpoint direct cause and effect between student loan debt and other
financial decisions. But he says, "There (are) enough warning signs."
Kantrowitz cautions that one can't draw definitive conclusions about
the effects of student loan debt, he says it "does seem reasonable" that
it's impeding economic progress for many in this generation.
loans become the go-to way to finance education in the USA, experts say,
this generation could be the canary in the coal mine for what the
nation might see going forward. Today, Millennials are paying the price,
but the loan crisis, they say, has a much longer tail.
student debt is a roadblock to economic opportunity, that really
undermines a philosophy of how America has moved forward and prospered,"
Chopra says. "So many Americans have taken risks to start small
businesses, to buy a home, and that has been a traditional way in which
our economy has moved forward and people have achieved economic
There's also the potential for a cascading effect for
those who have so much debt that they're on 20-year repayment plans,
rather than standard 10-year plans, Kantrowitz says.
they will still be paying back their own student loans when their
children enroll in college," he says, noting that the cycle will
probably then repeat: They will be unable to save for their children's
education, so those kids will be forced to take loans and graduate with
even more debt.
In 2008, the most recent year for which there is
data, roughly one-third of bachelor's degree recipients, or about
400,000 students, had enough student loan debt to qualify for a 20-year
repayment plan for federal loans, Kantrowitz says, based on his own
analysis of National Postsecondary Student Aid Study data.
'HIS DEBT IS MY DEBT'
loan debt isn't just a financial impediment; it also has broad social
implications and the potential to do "significant damage to families,"
Beck says, as couples hold off on marriage and children.
and Prowse of Berkley, Mich., would like to get married but are nervous
about combining their debt. Mannino owes about $34,000 after graduating
last year from Oakland University in Rochester, Mich. Once Prowse
finishes his master's degree in environmental science at the University
of Michigan in 2015, he'll have close to $100,000 in loans from both
undergrad and grad school.
"I want to be with him, and he's 26
and wants to get married, and it's just hard to make that commitment,"
Mannino says, "because then his debt is my debt. It's just really
frustrating because that has to come before everything else even though
we really care about each other."
Student loan debt may be
subsequently delaying both marriage and homeownership as couples wait on
taking either of those steps together.
The National Association
of Realtors says that most first-time home buyers rely on savings to
cover a down payment and that student loan debt may be prohibiting young
prospective home buyers from saving enough.
"The housing market
is recovering, but it's recovering without the first-time buyers," says
Lawrence Yun, chief economist for NAR. "Right now first-time buyers
comprise about 30% of the market. Normally it'd be closer to 40% or
Student loan debt obligations could also be affecting the
ability of younger buyers to qualify for a mortgage, Yun says. "The
mortgage underwriter considers that another required monthly payment,
which means the larger the student loan, the less likely you are to
qualify," he says.
A COLLECTIVE VULNERABILITY
Pilnick of Hoboken, N.J., says her student loan payments are keeping her from taking on a mortgage and buying an apartment.
She doesn't regret taking out $63,000 in loans to get her master's
degree in corporate communication at New York University because it led
to a higher-paying job in her field. Her minimum monthly payment for her
loans is about $540, yet she's paying $1,000 a month in an effort to be
"When I turned 28 I felt like the clock was
ticking," Pilnick says of becoming a homeowner, but she can't afford
both a mortgage and higher loan payments.
All of the college
graduates interviewed by USA TODAY acknowledged that student loans were a
burden they knowingly took on. But today's high schoolers and their
families need to be savvier about the way they choose to pursue higher
education, says Bob Mackey, president and CEO of Housing and Credit
Counseling, a non-profit organization based in Topeka and a member
agency of the National Foundation for Credit Counseling.
and more students should be looking at the kinds of areas of emphasis in
college that appear to be, after graduation, more employable," Mackey
says. He recommends that more students consider working during college
to offset their expenses or taking time off before going to college to
build up savings.
"There are a lot of things that these kids can
do to keep the debt down," Mackey says, such as starting at a community
college that is less expensive and taking advantage of grants and
The consequences of a rising debt load may not be
immediately noticeable in the years just after students graduate, but
the long-term impact could be crushing.
"It's not one of those
things that matters a lot in any given year, but over a couple decades
or generation or two, it matters a great deal," Zandi says. "It means
that they'll have less spending power. It means that they'll be less
financially prepared to send their own kids to college or for their own
retirement down the road. It just makes for a less healthy economy and a
more vulnerable one."