Generational Disaster: Debt-Laden Millennials Set Back By $140,000 Vs Their Parents

As ZeroHedge readers are doubtless aware, massive student loans have become an anchor around the necks of millions of young graduates - who are finding it increasingly difficult to break out from under the yoke of crippling debt. 

Outstanding student debt has more than doubled since the 2009 lows alongside the world's biggest experiment in synthetic economic growth thanks to quantitative easing - standing at nearly $1.5 trillion. 

And times are still "good" so to speak...

As we reported in January, nearly 40% of student loans taken out in 2004 are projected to default by 2023 according to a report by the Brookings institute.

This is a major problem - one which will either resolve through a resurgent economy, or tacking another Trillion plus onto the national debt once bankruptcy laws are changed and debt forgiveness becomes the next generation's problem (you don't actually think the banks will take the hit, do you?)

Until then, young Americans are drowning in debt, unable to improve their standard of living, and are significantly worse off than their parents generation.

Millennials are now graduating with excessive levels of debt - often used not just for tuition, but living expenses as well. Their baby boomer parents, meanwhile, enjoyed entering into their 20s with little to no debt, significantly high purchasing power - enabling a typical family to afford a mortgage and a decent standard of living on one salary. Boomers, unencumbered by crippling debt, were also able to begin saving much earlier - thus taking advantage of compound interest. 

The math isn't looking good for the kids... Using a an assumption of $40,000 in debt upon graduation (the class of 2016 average was $37,172 and it's growing):

For example, say you graduate with $40,000 in debt and you owe a 4% interest rate for 15 years. While the federal government expects the loans to be paid back in 10 years, it takes the average Wisconsin graduate 19.7 years to pay off a loan for a bachelor’s degree. Therefore, it’s a reasonable example. In this mock example, monthly payments would be $295.88 and $53,257.53 in total. If you don’t have student loans at graduation like many baby boomers and you put $295.88 in a diversified portfolio which returns 6% per year, you will have $86,477.68 after 15 years. Therefore, the difference between someone with student loans and without them ends up being $139,735.21. The difference grows exponentially as the student loans grow because the interest paid and the returns on the potential savings increase. -UPFINA

The bottom line: it's taking much longer for new graduates to dig their way out of debt, start saving, and earn enough to retire comfortably. It's simply not penciling out anymore for many Americans. 

About that inheritance...

Millennials drowning in debt hell are also facing a shrinking inheritance, should they be so fortunate to receive one - as their boomer parents are plowing through their savings and chipping away at the equity in their homes. Eight years of low interest rates have also drastically undermined the return savers and retirees were counting on. 

As we reported yesterday, a study released by GoBankingRates reveals that older people planning their retirement have cause for concern. Forty-two percent of Americans are facing their golden years with less than $10,000 in savings. A lack of savings and planning has reduced what should be an enjoyable time in seniors’ lives to a period of stress and worries for many. (h/t Virginia Fidler via

A 2007 study by the Insured Retirement Institute found that 24% of boomers have no retirement savings - the lowest number since the study started in 2011. 

Only 55% of Baby Boomers have some retirement savings and, of those, 42% have less than $100,000. Thus, approximately half of retirees are, or will be, living off of their Social Security benefits. -Barbara A. Friedberg

In other words: 


Delving Eye ACP Wed, 03/14/2018 - 20:19 Permalink

My daughter commuted to a nearby state university (in wealthy Fairfield County, CT) for her BA and MFA. She worked at Stop & Shop to buy herself a used car. I footed the bill for her tuition, which came to $51k total after Pell Grants and scholarships. She's got a good job now and money in the bank and so do I. And no student debt. I'm not rich, just smart about what I buy and how much I spend. It's not rocket science, just common sense. And no trying to keep up with Joneses.

In reply to by ACP

ZeroSpam pier Thu, 03/15/2018 - 00:51 Permalink

^^^ pier ^^^ CHRONIC SPAMMER

This chronic spammer (aka "stizazz" and "lloll" -- recently banned) is a CHRONIC SPAMMER whose "disguised links" ("SOME will NEVER", above) will take you to his Spam- and Trojan-laden webpage, fondly known by ZHers as "The Whacked Out Biblicism SPAM page" where you will be the happy recipient of numerous virus from this very disturbed and obsessed individual, spamming here for more than five years.


Copy and send this text to "Please remove all postings and ban log-on from user "PIER" who chronically posts short-URL links to his virus- and spam-filled website. This is the same individual posting chronically as recently-banned "STIZAZZ" and "LLOLL", among dozens of other banned log-ons (that's YOU dailywesterner and biblicisminstitute). Thank you."

In reply to by pier

3LockBox Wed, 03/14/2018 - 18:25 Permalink

I say screw them...Default...Those that loaned out those sums for the education they are giving out now deserve to get screwed. A debt jubilee MFers!

How could anyone in their right mind loan out those sums to the risky untested pre graduate? It is a numbers game! Total racket! And it increases the cost of education exponentially by offering easy money!

FWIW: I paid my way back in the day.

In reply to by

Citxmech VAL THOR Wed, 03/14/2018 - 18:57 Permalink

Of course, these budding socialists are going to vote to socialize their losses (much to the glee of the fascist oligarch bankster class).  Only problem is, that there will be nobody left to pay for it.

F'n cashless universal income is going to be such a colossal train wreck...  These useful idiots won't know what hit them.  You can almost feel the cognitive dissonance coming.

In reply to by VAL THOR

MK ULTRA Alpha Citxmech Wed, 03/14/2018 - 19:23 Permalink

LOL and Bush was allowed to throw away $3 trillion on Iraq and Afghanistan. And we're still throwing away money in the middle east and Afghanistan.

It's for who? wars for Israel. The US is getting ready for more wars for Israel. Did anyone vote for more wars for Israel? no.

It's real strange Greenspan, Rivlin, and even stockman on here pushing to abolish social security. Will they give back the money we put into social security? no.

Trump is Ju Ju nuts, I will not be voting again for him.

I will not vote again in my lifetime. America is a lie, it's because of who?

In reply to by Citxmech MK ULTRA Alpha Thu, 03/15/2018 - 00:34 Permalink

I agree with everything other than why they are "throwing away $3 trillion". Israel's part in the fraud is the useful idiot. The idiot who doesn't have oil, doesn't have natural resources, doesn't have anything worth fighting for other than other idiots willing to play along by supposedly threatening them. Most of the $3 trillion went into the pockets of the MIC. If it isn't Israel, a new or different useful idiot will be created to perpetuate the fraud.  Follow the money and you will discover the reasons for everything.

In reply to by MK ULTRA Alpha

itstippy VAL THOR Wed, 03/14/2018 - 19:26 Permalink

"And ending the draft was an enormous mistake."


Raising Hell and ending the draft was one of the things we Boomers did right. What are you, a National Socialist or a Red Commie? The Federal Government has no business drafting young people into military service unless the Nation is under existential threat. And no, the Gooks in Vietnam and the Ragheads in Iraq were not threatening this Nation's existence.

Drafting teenagers to go fight in the jungles of SouthEast Asia was one of this country's most shameful episodes.

In reply to by VAL THOR

Mr_Potatohead Rickety Rekt Wed, 03/14/2018 - 18:50 Permalink

This article is missing one key development: the student debt problem can be solved very quickly by the government offering employment in exchange for debt forgiveness. At the rate things are going, we'll need lots of modern day cannon fodder to fight the Russians, Chinese, Iranians, N. Koreans, etc. There probably are lots of censorship and investigative jobs similar to those held by millenials at Twitter and Google and Facebook. We'll need zillions of right-minded people to track down anybody who clearly isn't thinking the right things. And we'll need even more to re-train those who are slow to cooperate. They'll be plenty of jobs for those who wish to reduce their student debt. The only downside is that everybody doing this kind of work will have to wear the same brown shirt.

In reply to by Rickety Rekt

Mr_Potatohead HRH of Aquitaine 2.0 Wed, 03/14/2018 - 20:21 Permalink

They'll do exactly what they're told to do - like obedient TSA agents.
Watch their neighbors? Check.
Report on people growing/selling homegrown produce without paying fees/taxes? Check.
Find out who has guns? Check.
Determine political loyalties and willingness to support SJW issues/dogma? Check.
Identify preppers and people inclined toward such behavior? Check.
The list goes on and on and on.

If you haven't done so already, read "Atlas Shrugged". Not much about human behavior has changed since this book was written in 1957. You'll get lots of ideas about how this might work!

In reply to by HRH of Aquitaine 2.0

itstippy Rickety Rekt Wed, 03/14/2018 - 19:38 Permalink

"People are well trained to ask the almighty govt for help."

Not "ask", more like "demand". They vote for it and if they don't get it they march in the streets.

Good God man, it's for the children! You don't like children? I've got news for you - 80% of the adults in this country now think and act like children. "You can tell the Men from the Boys by the price of their toys" is an INFURIATING philosophy.

In reply to by Rickety Rekt

Sudden Debt house biscuit Wed, 03/14/2018 - 18:26 Permalink

They simply don't care!!

If you tell to the younger people about their retirement future, they just ignore it all together.
And by young, I'm talking everything under 35!

And they do expect a lot of money from their parents. They all think their parents are rich and that their lives are assured.

But let me tell you: money you didn't work for spends a lot easier then you think!!

They're doomed doomed doomed.

Today, I had 3 applicants for a assistent job... they all want a nice "work life balance" salary is the second question... and after that I lost interest.
THEY CAN DO EVERYTHING!!! untill you ask 1 detail... how did you do it? ehe... euh euh euh....
they all want to be a manager but have no clue what a manager does.

As an employer, these young people are a real problem!

In reply to by house biscuit