We’ll refrain from jokes about avocado toast or buying too many lattes. The reality is, millennials have the cards stacked against them when it comes to everything from buying a house to repaying student loans.
Here’s why millennials can’t have nice things.
Millennials have had not one but two “once in a generation” financial phenomena setting them back.
The Great Recession, from December 2007 to June 2009, was the longest economic downturn since World War II. Millennials entering the job market at this time were faced with low earning potential, which has likely delayed milestones like buying a home.
Similarly, millennials entering college at this time were more likely to take out student loans to cover the cost of education, a burden they’re likely still shouldering today. While it ended in 2009, this recession has had a deep and lasting impact, especially on older millennials. They’re more likely to make less money and miss out on earning and saving potential early on in their career.
Just as millennials were finding their footing in the workplace, COVID-19 hit. The pandemic has not only altered how we live but has had a profound impact on younger millennials. A startling amount of young millennials moved back in with their parents during the pandemic amidst layoffs and economic uncertainty. While stimulus checks and the student loan pause helped, the recession and financial fallout around the pandemic spelled out significant setbacks for millennials.
No, it’s not irresponsible spending that’s keeping millennials from purchasing a home.
From the implosion of the housing market in the Great Recession (see above), to one of the hottest seller’s markets on record during the pandemic (see above), millennials just can’t catch a break when it comes to buying a home.
The Great Recession cratered the housing market, and shortages in the pandemic triggered a housing shortage of historic proportions.
To make matters worse, once millennials find a home, they’re unlikely to have the buying power to purchase it. Most millennials with student loan debt are putting plans to purchase a home on hold due partly to the burden of monthly payments. With an average student loan debt burden of $38,877, there’s not much wiggle room in a budget to save for a downpayment.
With an inability to purchase a home, millennials are getting shut out of the chance to build equity and wealth in property, further putting them behind generations who came before.
Student Loan Debt
The cost to attend a four-year private and public university has skyrocketed in the past 30 years, according to CollegeBoard.
In 1992, it cost:
- A four-year public institution is $4,160 annually
- A four-year private institution is $19,360 annually
Compare that to the 2020-21 school year, where the cost to attend:
- A four-year public institution is $10,740 annually
- A four-year private institution is $38,070 annually
Education costs have risen at a faster rate than income for most families, meaning a larger burden of student loan debt for millennial grads. Sky-high monthly student loan payments eat into budgets, so millennials are less likely to save for things like retirement or purchasing a home.
While Biden’s student loan forgiveness has been a bright spot in combating the rising cost of education, its pending lawsuits have thrown a wrench in the plans, delaying the program until the Supreme Court makes a decision.
You may feel like it’s an uphill battle in everything from buying a home to paying off your student loans, but you don’t have to fight this on your own.
Chipper is the #1 app for student loans, offering you tools like Round-Ups and Rewards on top of easy-to-use tools to help determine if you qualify for student loan forgiveness or an income-driven repayment plan. Get started with Chipper today.