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long-term effects of student loan debt

Long-Term Effects of Student Loans for Millennials

According to a study released by Bloomberg, millennials are now in more than $1 trillion of debt, most of which is made up of student loans.

That figure is the most debt young adults have faced in more than a decade. As the cost of college tuition continues to rise, student loan debt continues to climb. Millennials took on student loan debt when they were young and now their debt is having a major impact on their adult lives. The long-term effects of student loan debt are causing ripple effects into many other aspects of life.


One of the major long-term effects of student loan debt is the delaying of major life milestones. Housing is the area in which this impact can be seen most profoundly. Millennials grew up believing in the American Dream – which typically consisted of buying a home and starting a family. And in that picture-perfect world, adults typically achieve these goals by about age 30.

But for many millennials, these dreams have been put on hold, largely as a result of debt. Between 2005 and 2014, home ownership from people aged 24 to 35 dropped nine percentage points. Of that drop, 20 percent is attributed to student loan debt, the Federal Reserve estimated. As a result, more millennials are continuing to rent for longer rather than taking on a mortgage. Having steep student loan payments to deal with each month hinders millennials’ ability to save for a down payment. In addition, millennials more hesitant to take on a mortgage payment.

Credit Card Debt

Student loan debt and credit card debt actually go hand in hand as long-term effects of student loan debt. Credit card debt is actually the most prevalent form of debt among student loan debt. And millennials with college degrees are more likely to have credit card debt. The link here could be that having student loan debt drains your monthly income. Therefore, you may be more likely to put other expenses on your credit cards. Additionally, the long-term effects of student loan debt can prohibit millennials’ ability to pay off credit card debt. The relationship between credit card debt and student loan debt, then, tends to be a chicken-and-egg situation for millennials.

Other Major Life Decisions

In addition to delaying the purchase of a home, millennials are facing other long-term student loan debt consequences. Carrying so much student loan debt is impacting millennials’ other financial decisions including buying cars, continuing their education and investing. Millennials are waiting until later in life, once they’ve paid down their student loans, to make these big-ticket purchases.

Assets vs. Experiences

This inability to gather assets at the same rate as previous generations is certainly a long-term effect of student loan debt. But is that necessarily a bad thing? Studies have shown that millennials, in fact, prefer to spend money on experiences rather than assets anyway. And experiences provide more long-term happiness than the acquisition of assets, according to studies.

Millennials are undoubtedly struggling with the long-term effects of student loan debt. They are facing more student loan debt than any other generation before them. As a result, millennials are putting major financial milestones on the backburner, including buying homes, paying off credit card debt and buying new cars. However, while the long-term consequences of student loan debt may seem bleak for millennials, there is a bit of a silver lining. Millennials value experiences over the acquisition of assets. Therefore, putting off acquiring these assets may not be the worst thing for millennials, who can enjoy experiences instead.

If you’re struggling with student loan debt and putting off living your life as a result, contact the student loan debt professionals at Tayne Law Group today.



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