With the dream of a shiny new job offer that includes benefits, an office space of their very own and something they’ve only heard about – paid time off, students have been flocking to universities and colleges to get that slip of paper that will one day be the key to opening the locked doors to all those “good jobs.” Unfortunately, these days, reality hits and many of these graduates are instead greeted by the dismal job market and uncertain economic conditions immediately upon graduation. Even armed with that very expensive piece of paper, many graduates are finding the competition for those limited entry-level positions is stiff.
Four years of college at rapidly rising tuition rates creates a financial burden that, even with an entry-level salary, paralyzes many graduates from important life stages. Student loan debt has already surpassed credit card debt in the United States and has exceeded one trillion dollars. Students that take on loans in order to pay for their education must pay them back in full since these loans are non-dismissible by bankruptcy, even in lieu of income. Some of these recent graduates are pressured to move back in with their parents while attempting to mitigate their debt. This prevents parents from downgrading their home or buying that beachside condo in Florida since they still need the extra rooms for their twenty-something-year-old recent college graduate roommates.
A little known fact, parents of children attending college are actually taking out more in student loans to pay for their children’s tuition, averaging $34,000 while college graduates have an average debt of $25,250 upon graduation as of 2011. Many parents are dipping into their 401ks early and relying heavily on credit cards with high interest rates to compensate this financial burden.
So, financial services, times have certainly changed. Instead of targeting this group for additional loan products, perhaps the key to Millennials’ brand loyalty will be to offer them strategies to climb out from under their debt burden – a strategy that could pay off when this highly educated and motivated group starts earning enough to save, invest and maybe even, some day, move out of their old bedroom and buy a house of their own!
Subscribe to GfK Insights