Amanda Hill, 27, deals with big student loan debt by doing everything she can to keep her other bills small. “I have cut out…
Amanda Hill, 27, deals with big student loan debt by doing everything she can to keep her other bills small.
“I have cut out all the things that aren’t absolutely necessary,” Hill said.
She eats out maybe once a month. She limits her driving to control how much she spends on gas. She lives in an apartment.
She avoids getting her nails done or shopping. She buys clothes about two times a year.
Hill – who is juggling $90,000 in student loan debt after graduating in 2015 from Hampton University in Virginia – figured she didn’t need a car payment on top of her monthly student loan payments.
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So she bought a 2005 Saturn Ion last year from a woman at her church.
She paid $500 for her car.
“And I was surprised it actually worked,” she said. “But I had to learn how to drive a stick shift.”
Dreaming of buying a new car when you get that first job out of college? Or maybe buying your first house? It used to be a rite of passage. Not so much any more.
“It’s not going to be you’re 30 and you’re married and you’re going to have kids,” said Hill.
She has no timetable for when she’d like to buy a house or make other big purchases. She still hopes to go to graduate school but has delayed that until she has a better handle on her college debt for her bachelor of arts degree.
Right now, she said, it’s more about trying to stay afloat.
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About $1.46 trillion in student loan debt has many millennials, as well as others, hiding their wallets and putting big ticket commitments on the back burner.
Plain and simple, many young consumers just aren’t ready to consume. And many sure don’t want to shop until they drop like their parents.
“This is really a pervasive trend and it will not be reversed any time soon,” said Richard Curtin, director of the University of Michigan Survey of Consumers.
In a special report released in late February, the U-M research team noted that consumers younger than 35 aren’t terribly optimistic about making big purchases – unlike previous generations.
In the past decade, younger consumers have viewed buying conditions for homes, cars and other large household items far less favorably, the U-M survey noted.
The survey, which monitors consumer attitudes and expectations, has been conducted by the U-M Institute for Social Research in Ann Arbor since 1946.
What’s going on here? Some of it is, no doubt, all that college debt. But other factors may be coming into play, too.
One reason many young consumers are holding back their spending is that they’re frequently worried about taking on new debt, according to U-M report released Feb. 22.
Student loan debt in total is intimidating.
Outstanding student loan debt stood at $1.46 trillion in the fourth quarter of 2018, according to a report by the Federal Reserve Bank of New York.
Those ages 18 to 29 had the most college debt – more than $1 trillion.
“Average student loan debt at graduation is going to continue to increase,” said Mark Kantrowitz, publisher and vice president of research for Savingforcollege.com.
The average debt at graduation is a bit under $30,000 for bachelor’s degree recipients, Kantrowitz said.
Borrowers in bachelor’s degree programs are increasingly hitting the borrowing limits for federal student loans, causing them to turn to private student loans and parent programs, such as the federal Parent PLUS loan.
The aggregate loan limit for Federal Direct Stafford Loans is $31,000 for dependent students and $57,500 for independent students.
