While student loan debt is still a big challenge for millennials, there is evidence that it is becoming more manageable thanks in large part to an improving economy, expanding job market and rising incomes for the demographic group.
That’s the gist of a study recently completed by Sarah House, senior economist with Wells Fargo. She discussed details of her report – “Student Debt: Does a Rising Economic Tide Lift All Boats?” – in a virtual conference call on Tuesday.
Prompted by the lowest overall unemployment levels in 20 years, House decided to research whether there was a measurable impact on the millennial segment of the $1.4-trillion national student-loan debt behemoth. She primarily used federal statistics from 2016, the most recent figures available, to examine student loan activity for millennials, who by the Pew Research Center’s definition would have been ages 20 through 34 in 2016.
Among the study’s key findings:
· Although graduating into a recession has weighed on earnings growth for millennial workers now in their late 20s, income prospects have begun to strengthen for millennials younger than them entering the labor market. In 2017, for example, median weekly earnings of those ages 20-24 surpassed those ages 25-34, although both age brackets saw a rise.
· Over the past two years, the strongest job growth has been among millennials, with the 25-34 age group followed closely by the 20-24 age bracket showing by far the greatest gains among all employment populations.
· The educational debt-to-income ratio of millennials overall was 42.4 percent in 2016, a steady decline from a high of about 47 percent in 2013. The 30-34 age group has seen a steady decline, though not as sharp, while the debt-to-income ratio increased for ages 25-29 to about 45.6 percent.
