People often think Millennials are the only ones who are impacted by student debt. However in the United States today there may be more Baby Boomers with student loans than there are Millennials. This can affect many things including people’s abilities to buy homes, cars or even find jobs.
STUDENT DEBT LOANS CAN AFFECT PEOPLES ABILITY TO BUY HOMES, CARS OR ANYTHING ON CREDIT
Some of the main factors lenders asses when determining if a borrower will qualify for a loan can include: the amount of debt the borrower currently owes, if they’ve consistently made on-time payments, and how much money they’re earning. If a borrower has ten’s of thousands of dollars in loans or has missed numerous payments over the years, they might be denied or offered a loan with a high interest rate. Another aspect of this problem is that it can affect anyone who is applying for a mortgage regardless of how high their credit score may be.
This goes back to the fundamental law of supply and demand – If there are fewer people who are qualifying for mortgages, this could mean higher interest rates for the people who are qualifying. If lenders have the same costs to run their businesses but aren’t able to make the same amount of money unless they increase interest rates, then they’re likely to do just that. This type of situation can also affect car loans and other loans. For this reason, anyone can be affected by student loan debt regardless if they are a Baby Boomer, Gen X or Millennial.
MORE STUDENT DEBT USUALLY RESULTS IN FEWER HIGH PAYING JOBS
Debt usually prevents people from saving for retirement. Many people have a tough time finding extra money to put toward their loans every month, let alone toward retirement funds. If fewer people are saving for retirement, that usually means fewer people are retiring earlier. Many times this results in people staying in the workforce longer. People who are nearing retirement typically have higher paying jobs since many of them have likely been promoted several times over the years. If people are staying in their high paying jobs longer, this could mean fewer jobs for Millennials and Gen Xr’s to promote in to. The downside for Baby Boomers is that they’ll be forced to work longer.
HOW TO ADDRESS DEBT
Debt is not uncommon. The problem usually occurs when people have a significant amount of debt over a long time frame. The main thing to remember is that it’s never too late to start working on effective debt management strategies. Some of these strategies can include making extra loan payments or paying off loans with the highest interest rates first. Managing student debt doesn’t have to be difficult. If you’re looking for advice on student loans or are interested in loan forgiveness, we can help. Feel free to contact us here.
Hope Credit can provide you with student loan professionals who can get you through the fear and doubt.
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Sources:
Dickler, Jessica. (2018, October 16). Student loan debt isn’t just a millennial problem. Retrieved from https://www.cnbc.com/2018/10/16/student-loan-debt-isnt-just-a-millennial-problem.html