It’s well known that millennials in the U.S. have to live under a cloud of debt. A new study by LendingTree has shown just how bad the situation is for young Americans today with the median debt balance for millennials living in the country’s 50 largest cities $23,064. The research analyzed anonymized credit report data on the LendingTree platform (which has over 9 million active accounts) from people born between 1981 and 1996.
Excluding mortgages, millennials in San Antonio, Texas, have the highest debt burden in the country with a median of $27,122. Pittsburgh comes second with $26,403 while Austin is third-worst with $26,164. Three cities in California had the lowest median debt burden – San Jose, Sacramento, and Los Angeles. All of them have median debt levels below $20,000 among millennials.
Student loans account for the highest share of America’s millennial debt, comprising 40 percent of their total credit and loan balances. The proportion varies considerably between cities and it is at its highest in Philadelphia at 49.1 percent and its lowest in San Jose at 24.1 percent. Auto loan debt is close behind and it accounts for 40 percent of those debt balances. Differing significantly by city (depending of course on public transport and the extent to which a car is necessary), it accounts for 43 percent of millennials’ average total debt in Riverside, California and just 22 percent in New York City.
The Northeast of the country is the worst affected and according to a CNBC report, 75 percent of New Hampshire’s graduates carry outstanding debt, the worst in the country, with the average amount owed $36,367. Utah has the lowest rate of debt and graduates there owe an average of $20,000.
The following infographic shows how third-level education in the U.S. has gone from being a dream to being a “debt sentence” for millions of American students. Federal Reserve data shows that the number of student loans stood at $480 billion in 2006 and by 2018, the debt mountain had risen to $1.53 trillion. The reasons for the debt are numerous and complex but are likely to include increases in tuition costs, less students finishing their courses and the lingering impact of the financial crisis.
In the United States, a year at college can cost more than a BMW. Dealing with and preparing for the increasing costs of education is more important now than ever, especially as college enrollment rates in the United States rise.
Prospective and current American college students are having to explore various avenues in order to pool together the necessary resources to allow them access to or to continue on their chosen path of further education. In 2016, in a survey investigating how the typical family in the United States pays for college, an average of only 29 percent of the total costs could be met by financial support from parents, whereas grants and scholarships made up an average of 34 percent.Private loan organizations specializing in college funding such as the SLM Corporation, commonly known as Sallie Mae, make it possible for a number of people to enter higher education in the United States. Net student loans made by Sallie Mae in 2016 amounted to around 15.13 billion U.S. dollars in total; the company manages the debt of more than ten million borrowers. Such high levels of debt can place tremendous burdens on individuals and in the current financial climate, with financial hardships and the resulting slipping standard of living, the impact of college debt on financial and life decisions in the United States has been shown to be prevalent, with 40 percent of college graduates stating that debt would limit the amount they can spend on rent or mortgage payments.