Alamy It’s not news that — workers born after 1981 — have it hard, economically speaking. But in the past week, two new reports have cast light on just how tough it is out there for the youngest generation in the job market. Instead of building on their careers, paying off their student loans, and working on buying their first homes, the largest generational cohort in history are — according to studies released by Pew Research and the Department of Education — increasingly living at home, eking out a living at low-paying jobs, and falling behind on their student loans.
These economic woes are just more of the same for Gen Y. They were already carrying the highest student loan debt in history, and they graduated into the worst job market since the Great Depression. According to an analysis by the Associated Press, 53.6 percent of college grads 25 and under are either unemployed or underemployed. And on average, they’re carrying $26,600 in student loan debt.
A recent report from the Department of Education makes it clear just how dire the problem is becoming: According to the DOE, 22 percent of borrowers enrolled in the direct federal student loans program are in default or forbearance. This, incidentally, matches the overall rates of student loan delinquency. In other words, more than one in five borrowers aren’t making enough money to meet their obligations.
Apparently, these recent grads also aren’t blowing all their money on rent: According to a study released last week by Pew Research, 36 percent of millennials are living at home with their parents. By comparison, 32 percent were doing so in 2007, on the eve of the Great Recession and 34 percent were doing so in 2009, when the recession officially ended. In other words, for millennials (and their parents), the problem is getting worse, not better. Indeed, this is the highest percentage of young adults living at home since the 1960s.
As we’ve reported in the past, federal and state governments are working on proposals to help ease the student loan debt crisis. Pay as You Earn, Obama’s federal program, caps debt repayment at 10 percent of a borrower’s discretionary income, and forgives any debt that remains after 20 years of payments. Meanwhile, Oregon’s Pay It Forward program will let borrowers attend a state university tuition-free, but will require that they pay 3 percent of their income for 20 years.
These programs, while attractive, will bear fruit down the line, but for now, the economic landscape for millennials looks bleak — and it doesn’t show many signs of improving any time soon.