By Fiona Flynn
The rise in student debt costs forces some millennials to postpone spending on essentials like housing and healthcare. Today’s society has seen a drastic shift from the past generations when it comes to purchasing goods and luxury items. Past generations have never had college tuition payments quite like students today. On average, tuition increases by 8 percent a year, which results in college tuition doubling every nine years.
Who Are Millennials?
While the discussion varies, it is reported that millennials are those born between 1980-2000. They were born in a different time with a drastically different worldview. These young people grew up in the time of the recession where they saw how money played a part in their everyday lives. Their understanding and consciousness of this concept has seemed to stay with them throughout early adulthood.
With an estimated 92 million millennials, they are the first generation where college seems to be expected of them, thus creating a generation with a massive amount of student debt. It is reported that the average 20-something has an average of $22,135 in debt. Does this debt have anything to do with their new lifestyles? Students today are paying on average twice as much as generations before them when you adjust for inflation from borrowing 20 years ago.
So, what exactly have we found out about the millennials?
They have a growing trend of minimalism and having access to items and goods rather than ownership. Many scholars attribute the trend of not purchasing goods to the debt and history that these young people have taken on. Tim Stock, a professor at Parson’s School of Design stated, “the recession left us acutely aware of the fallacies of finance and the need for sustainability.”
In the past, home ownership was common among young adults. Today, more millennials are reluctant to leave the nest. Since 1990, the number of 18-34 year olds still living at home has continued to rise; however, a whopping 93 percent of millennial say they would like to own a home in the near future. The chart above shows the percent of 18-34 year olds who live at home between the years of 1990-2010. In 2001, the percent of millennials living at home was 26.7 percent, but in 2010 it had risen to 29.9 percent. However, 95 percent of renters still plan to buy a home one day.
What Else Do We Notice About Our Millennial Population?
In 1970, the average age to get married was 23 years old. Today, 30 years old is the new age to get hitched. Since the 1970s, the percent of women who are having children in their early early to mid-20 has dropped as well. The trend that millennials are proving – the putting off of big milestones – is a shift the U.S. might not be ready for. Tom Keane, columnist for The Globe, says in his article “Reject Timely Marriage At Your Own Risk”, that the delay and complete refusal to marry by millennials may not be so good for our future generations. He writes how children do better in a stable household, and he feels that these millennials may come to regret the decisions they made.
With apps like Uber, Lyft, and Curb these young adults don’t need to buy cars or other luxury items. No longer are they reliant upon the idea that they must purchase these goods in order to go about their daily lives. Instead, new applications and services are being offered so that these young people do not need to purchase these big-ticket items. Renting and leasing continues to be on the rise in major cities. Perhaps these young adults were witness to the crash of 2008, and are reluctant to spend their money in areas where it isn’t absolutely necessary yet. According to Citylab.net, the number of households that were rented increased from 36.1 percent in 2006, to 41.1 percent in 2014. Trulia states that the number of homes rented increased across all 50 states. The shift to a more minimal lifestyle is apparent.
The Millennial impact upon the U.S. economy will be greatly influential as they are the largest generation in history.
Beth Ann Bovino, Standard and Poor’s U.S. chief economist says that, ““Millennials are going to be making up half the workforce in just five years. They’re already the largest cohort of American workers”. Their spending habits are greatly influential to our economy. She says, “Two thirds of GDP is consumption, so we rely on people spending money.”
It’s vital that we take the time to follow the trends and examine just how they will affect the culture and lifestyle. The advancements made in medicine and technology.
Photo courtesy of goldmansachs.com