From student loans to the modern family, this is Millennial Debt
Starting out as a young adult can be a tricky transition. One minute you are in the once in a life time experience of university, the next you are supposed to find your own way in life without so much as a helping hint- painted as an amazing fortress of opportunity, life can sometimes turn your views upside down. From trying to find your feet, searching for employment, to student loans trying to pull you down, and sometimes with the growing pressures of supporting your immediate family added to it – the future starts to glare from a distance, with over-indebtedness seemingly waiting down the road…sound familiar?
What seems to be the scariest trait of the younger generation is the unbelievable amount of debt young people find themselves in before even getting their foot in the door. It has become a common trend for millennials to be bombarded with credit opportunities before they become part of the working class, all in the form of store cards, credit cards, short term loans and student loans. After which some, if not most, will be stuck with the burden of supporting their families – but from many viewpoints, it seems that, millennial’s are stuck in the mud before they get a chance to even walk on their own.
A trend that seems to be coming to light more and more, ever more obvious in the current climate of South Africa with #feesmustfall and constant student protests, millennial debt is a worrying aspect of the new generation that will have detrimental effects on our future. Not only a problem for the less wealthy, it seems over-indebtedness is a definite future for our young people. From terrible spending habits, following trends to their own detriment, to the security of parents to fall back on, more and more young people are developing habits that cause frivolous debt before any real money starts to come in.
In a recent National Debt Advisors case study it was found that this predicament is ever more present in the life of young people today. Focusing on the story of Miss M, a former student, who now works as an intern and a part time DJ, this details the struggles young adults can find themselves in when the pressures of financial security begins to weigh in. Living with her parents, paying for her little brother’s school fees as well as the household groceries, Miss M finds herself in an all too common predicament of millennial debt, whereby she has left the comforting bubble of higher education and stepped into the den of over-indebtedness. Even with about 80% of students on the National Student Financial Aid Scheme, the average repayment time for student loans stands at aproximately a decade, meaning they don’t have the means to pay for the loans until they have established themselves in the business world. Having given out around R23 billion in loans and bursaries as of the 2011 academic year, the financial aid scheme had only recouped around R3.8 billion from that. With such a low rate of repayment and many amounts being reduced due to good performance from debtors, the scheme cannot sustain the student demand.
“By making college unaffordable and student loans unbearable, we risk deterring our best and brightest from pursuing higher education and securing a good paying job.”
– Mark Pocan
Not only student fees that put on the pressure, the modern family dynamic in South Africa is a crucial element of millennial debt. Much like Miss M, who supports her family systems through taking out credit, many young adults find themselves supporting their households and even covering education expenses for siblings. These huge amounts being placed on them push young adults further into debt with every passing month, making the harsh idea of over-indebtedness into a solid reality for their future. Living on credit, barely covering repayments at the best of times, this is the pressure faced by the growing adults of today.
While the scheme focuses on getting poorer or previously disadvantaged students into tertiary education, there is also the problem with the “missing middle”, namely the students who cannot afford tertiary education yet do not qualify for the scheme. These are the students who, in the hope of attending university, must take loans from private institutions and end up with heavy debt once their studies are complete…the all too familiar tale of millennial debt.
A problem that is a hot topic in the wake of the #feesmustfall movement, this if anything has shown the huge amount of inequality and lack of support for students trying to gain their tertiary levels. It would seem the students have had enough as they take to the streets to fight for free tertiary education as was promised to be given by 2013, as the ANC had declared a few years prior. With no options or fall backs, these students are facing a trap with no escape- to get an education you must also take on huge debt.
With over-indebtedness hitting young adults harder than ever, as well as the monetary system seeming to fail the world over, it looks as if the life of a millennial is a daunting one to say the least.