Student Debt 2013: Millennials and Their Parents Are Equally Screwed in This Economy
With graduation this month, students around the world should be very frightened for what will (or will not) come next in their career transition.
The International Labour Office (ILO) released their “Global Employment Trends for Youth 2013” report last week, which presents some very grim information for this year’s graduates. According to the report, the youth unemployment rate for 15 to 24-year-olds has climbed to 12.6% and is expected to reach as high as 12.8% by 2018. This means that 73.4 million young people around the world will be out of work during 2013.
It doesn’t look very good for American youth in particular. As Jim Kuhnhenn writes for the Huffington Post, the unemployment rate for those under the age of 25 with at least a bachelor’s degree has averaged 8.2%, up from 5.4% in 2007.
“I'm at an odd place right now because I've heard back from a few places that say I'm overqualified to be an intern, but at the same time I am under qualified for many entry level positions in the field,” says Michelle Boulé, who is graduating this year with a bachelor of science in cinema and photography. “I'm expecting to work at least one part-time job that isn't photography related, once I graduate to help support myself.”
On the other end of the generation spectrum, Americans reaching retirement age believe they will have to work well into their 70s and 80s because of a lack of financial security. According to a new survey by insurer Northwestern Mutual, one in ten Americans expect to work until their 80s and 32% anticipate working into their 70s. All of this is due to 51% of Americans feeling less financially secure than they thought they’d be.
Last month, Frontline released a special titled, “The Retirement Gamble,” which found that one third of all Americans have next to no retirement savings at all. Martin Smith, a correspondent for the investigation himself says, “Most of my savings went to pay for the kids’ educations … I’m now planning to work for as long as I possibly can.”
Students—and their parents—are now graduating with an average debt of $27,000, which comes with an interest rate increase on their subsidized Stafford loans. This will cost 10 million people $1,000 more over the life of the loan for each year of college, as the New York Times reports.
“I'm lucky,” says Steven Hondorf, a December 2010 graduate of Ithaca College in Ithaca, N.Y. “My parents helped and we did about 50/50. I think they may have taken more debt than I did. I was right around 30k, but combined between me and my parents, [we’re] probably somewhere between 50-70,000.”
Theodore Sparreboom, an ILO Senior Labour Economist also found that “one third of young job seekers have been unemployed for at least six months.”
Hondorf knows this reality all too well since he’s been without a steady job since he graduated. He’s kept odd jobs such as substitute teaching, coaching, custodial work and serving. “After 2 years of working 80 plus hour weeks, and not as a lawyer or in the financial world, and making peanuts in the grand scheme of how non-stop I worked, I am more than ready for a ‘career’ type job,” he says.
Youth cannot get jobs to pay for the massive amount of debt they have accumulated while trying to get an education suitable for a job. Their parents cannot retire to free up some of the job market also because of this and other looming debt. Is there anyway to actually break this cycle?