Thursday, March 26, 2009
Mom...I'm In Debt
Gen Y; I hope you're ready for some pain. No, not physical...unless you count bed sores from sleeping in and spending too much time on the couch watching House reruns because you're unemployed. I'm talking about the financial pain we'll feel it for the rest of our lives; yup...we're going there.
The reason for my angst is a recent Wall Street Journal article stating student loan defaults increased to 6.9% from 5.2% over the past year. Hooray, recession!
Sadly, this default rate comes from a perfect storm of a worsening recession, increased tuition to attend college, less saving by our parents to help us with paying for college, and a general willingness to go along with the crowd and drown ourselves in an average of $20K of debt by the time we graduate.
The sad thing is this; all our life, we were told to take on debt to fuel our collegiate dreams. "Oh, you're going to study anthropology at a prestigious and very private liberal arts school? AND you want to double major in art? That'll cost you $30K a year in loans! Don't worry; five years is an average. That means at least half of the people out there finish after five years!" No one ever told us that maybe we should do a cost-benefit analysis. No one ever asked us the question of, "Do you really think that's smart? What's your exit strategy? How will you pay that back?" Nope...we, the happy Gen Y, followed our dreams to minimum wage jobs and debt loads we won't pay off for the next thirty years. Even without a recession. Yay.
The hard part is this; should we have known to ask those questions? I don't feel like our parents did. Who was supposed to teach us about financial literacy? The value of compounding interest? Or even the general wisdom of savings?
Usually, Josh and I post about creative solutions or things that companies or people can do to improve their position (financially or otherwise) with Gen Y. In this case, I don't see much of a solution for Gen Y. As the first generation to not exceed the standard of living of its parents, there are few options for us. I could give the standard "cut up your credit cards, eat Top Ramen, sell your belongings, date cheap women, budget, and only drink PBR" type lines...but they seem inadequate given the number of people in my generation that will stay in debt for the rest of their lives as they struggle to overcome student loan debt, care for their aging parents with no savings, get married, have kids, and generally try to survive their lives.
Well, now that I've vented, I'm going to find that bottle of Three Buck Chuck I've been saving.
Mama said knock you out