How Students Are Reacting to High Student Loan Debts and the Stress of Becoming Debt FreeMay 29, 2015
Most students hope that after leaving university they will only live with their student debt for a few years, after which they will be able to start a new debt free post-graduation life. Few graduates expect the reality that a student debt will likely stick with them long into their adulthood. Finding permanent full-time work right after university or college is becoming increasingly difficult. Many grads have resorted to working multiple part-time jobs or taking on short-term contract work. This leaves them in a precarious financial position. More and more young Millennials are therefore moving home to live with their parents as they struggle to pay off student debts while earning meager wages.
These young Millennials are part of a larger demographic of under 45 year olds who are being squeezed for time, money, opportunity and debt. The higher levels of student loan debt, the lower paying jobs with less job security, and the high price of housing and cost of living for those in their 20s, 30s and 40s are all factors that contribute to Generation Squeeze. Recent graduates, along with young professionals who are thinking of starting their own families, are affected by Gen Squeeze and the stress and pressures of trying to become debt free before starting new life adventures. The stress and pressure on these groups also has ripple effects on other generations.
Living with parents to help save money
Recent university and college grads are increasingly moving back home to live with their parents while they search for work and try to pay down student debt. While the decision to move home in order to cut down on uncontrollable expenses (i.e. housing, cost of living, etc.) is a smart way to start thinking in terms of budgeting for debt repayment, young adults should also think about the repercussions of living at home. In an interview with The Globe And Mail, Christine Romans argues that, even if living at home is the smartest decision for someone with student loan debt to make, young adults should always be aware of the extra burden they’re putting on their parents. Becoming debt free should be high on the list of financial priorities, but not at the expense of draining parents of their retirement savings.
Waiting to be debt free before starting a family
A CBC article from last year tells the story of one graduate’s struggles with becoming debt free. The article reports on members of the Millennial generation who are put off by their financial situation post-graduation and therefore delaying “certain milestones, such as having children, getting married or owning property”. There’s nothing wrong with putting off these kinds of milestones if you’re not emotionally ready to take those steps, but the issue with Gen Squeeze is that the abundance of financial pressures Millennials and Generation Xers face often adds to personal debt. The CBC article states that 14 per cent of graduates with student loan debts have defaulted on their loans when they cannot pay their monthly payments. Being unable to make student loan debt payments is usually an indicator of larger debt issues. Taking measures to deal with student loan debt and reduce overall debt load may be necessary in order to move forward. There are a number of options for debt relief for Millennials, from budgeting to debt consolidation loans to filing a consumer proposal. A debt relief professional, like a trustee in bankruptcy or a credit counsellor, can guide individuals towards the option that works best for them.