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Millennials Are in More Than a Trillion Dollars in Debt

That is a pretty dramatic headline. Most of these story lines focus on the composition of debt. The vast majority is not credit card like most generations. The vast majority is student loan debt. That only makes sense since the millennial generation is the poster child for the student loan boom (government enabled problem). With over 1.5 trillion of student loan debt outstanding, the simple math would tell you that the millennial generation owes a trillion or so of that debt.  


The real story line is that the most indebted generation owes the second most difficult debt to deal with. Next to IRS debt, this is the worst kind of debt. In some ways, it is worst than IRS debt because it cannot be wiped out in bankruptcy. If you are in way over your head you are stuck.  


The other real story here is the future effect on our economy and the development of future generations. This kind of debt could end up redefining consumer spending (consumer spending makes up two-thirds of economic growth). This generation is last when it comes to home ownership. This is a generation of renters. Will this affect the whole concept of home ownership? A big debt burden creates the attitude of not ever wanting debt again. That is good and bad. That is good given the effect on healthier financial lives without debt. Yet, like it or not, consumer debt makes the economic world go around. What would our economy be like without debt as a whole fueling it?


The good that will come out of this will be the modeling for future generations. Up and coming generations are seeing the downsides of debt through the lens of student loan debt and the debt modeling of their parents. This is a generational transformation in a world of financial irresponsibility that we need to see occur. Question is, are we ready to see the transformation of an immediate gratification economy to driven by financial responsibility?