Survey: 56 Percent Of Young Americans ‘Living Paycheck To Paycheck’
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Charlotte, N.C. (CBS CHARLOTTE) – Four-in-ten young Americans in the workforce, or millennials, consider themselves “overwhelmed” by growing debts, with more than half (56 percent) reporting that they are “living paycheck to paycheck” amid mounting educational debt their baby boomer parents largely avoided.
A new Wells Fargo survey of nearly 1,700 millennials (ages 22-33) and 1,500 baby boomers found that 47 percent of these young Americans in the workforce are setting aside more than half of their paychecks to paying off debt, most notably, U.S. student loan debt which has risen to more than $1 trillion nationwide.
Millennials will likely continue to struggle under the pressure of debt, as 42 percent say that growing fiscal liabilities are “their biggest financial concern currently.” Four-in-ten of those surveyed say the debt they face today is “overwhelming,” versus less than one-quarter (23) percent of baby boomers.
Half of college-educated millennials who have had their diplomas for two years report that they still rely on financial support from their families to make ends meet.
Nearly one-third of millennials cited student loan debts as their top financial concern, in comparison to 44 percent of baby boomers who say they are saving for retirement.
When asked to estimate certain categories of debt as a percentage of monthly pay, millennials report their debt breaks down with: credit card debt at 16 percent; mortgage debt, 15 percent; student loan debt, 12 percent; auto debt, 9 percent; and medical debt, 5 percent.
According to May’s Monthly U.S. Treasury Statement, the cumulative outstanding balance for direct student loans has increased 517.4 percent since President Obama’s term began in 2009. The outstanding federal student loan balance at the end of last month was $739,641,000,000.00 – up $619,838,000,000 from the balance owed at the end of January 2009.
The survey also showed a gender gap within both income and savings. About 45 percent of female respondents reported feeling “overwhelmed” by debt, compared to 33 percent of men. One-half of women said they were saving money, compared to 61 percent of men.
Regardless of the seemingly desperate debt miring many millennials, these young Americans remain optimistic about their financial futures.
Seven in ten (72 percent) millennials are confident they will be able to save enough to create the lifestyle they want in the future, but millennial women are far less confident than their male counterparts, with 63 percent expressing confidence in comparison to 80 percent of men.
And although 56 percent of millennials said they were living “paycheck to paycheck,” nearly seven in 10 said they felt better off financially than other members of their generation and expected their standard of living before they retired to be surpass that of their parents.
Of the four- in-ten millennials who are not saving yet, 84 percent say they are not doing so because they “do not have enough money to save right now,” with the data showing no gender difference.
President Barack Obama signed a presidential memorandum on June 9 intended to make student loan debt easier to pay off for millions of Americans. The “Pay As You Earn” program is considered the government’s most substantial repayment plan for direct federal loans, and was extended to include people who took out loans before Oct. 1, 2007.
Last Wednesday, Senate Republicans blocked legislation to allow people with older student loan debts to refinance higher interest rates to below 4 percent. Democrats say the bill would have been paid for by the so-called Warren “Buffet Rule” – setting minimum tax rates for Americans making over $1 million.
But Senate GOP leaders accused Democrats of playing politics with a bill that wouldn’t have done anything to reduce borrowing or lower education costs.
“The Senate Democrats’ bill isn’t really about students at all. It’s really all about Senate Democrats,” said Senate Minority Leader Mitch McConnell, R-Ky. “They want an issue to campaign on to save their own hides this November.”
Some 40 million Americans have outstanding student loan debt totaling $1.2 trillion, making it the second-largest form of consumer debt, second only to mortgages, according to Warren’s office. People 60 and older account for some $43 billion of outstanding student loan debt.
– Benjamin Fearnow