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Although student loans are certainly a controversial topic, in practical terms, they are not the brutal handicap on young adults that the headline figures might appear to suggest.  The fact of the matter is that student-loan repayments are based on income so nobody is going to be left struggling to find debt repayments when they have no money coming in.  Repayments are also time-limited so today’s young adult students are not going to be paying them off in retirement.  In other words, student loans themselves, fair or otherwise, are probably not the main reason why so many millennials are in financial hardship.

The real reason millennials are struggling financially

In very simple terms, millennials are very likely to find that the salaries they earn in their post-school or post-graduate days will leave them with very little in the way of disposable income due to an unwelcome combination of relatively high living costs (especially for housing) and wage pressure in many economic areas (there are some exceptions to this latter point with graduates who have in-demand skills able to earn better wages).  In addition to this, graduates may well be carrying non-student-loan debt, issued on commercial terms, which will also take a bite (sometimes a substantial one) out of their take-home pay.  To this may be added the fact that millennials, by definition, have minimal experience of life and it’s easy to see how they could wind up taking on (extra) debt which they could have avoided.  This is even before you add in the influence of social media stars and the fact that starting out in life knowing you owe tens of thousands of pounds in student loans may encourage young people to take a “what’s a bit more?” approach to credit, especially when it’s so easily available to them.

The way forward

Realistically, there may be very little concerned adults can do to mitigate the impact of a high cost of living.  In principle, it may be possible for young adults to live with their parents after university, but this is unlikely to be an ideal situation for anyone, especially not when young-adult children decide that they want to couple up and start families of their own.  The cliched “bank of mum and dad” is a reality for at least some millennials, but again, this is not necessarily a sustainable solution, especially if the expenses of having children have limited the extent to which the parents have been able to make preparations for their own retirement.  Where parents and other concerned adults may be able to help, however, is by encouraging millennials to view their student debt as a challenge to be overcome rather than as a barrier which will hinder them all the way to retirement (at whatever age that may be in decades to come).  Although young adults may now be too old to be “told what to do” with their own money (even if they are living at home), they may be more open to being given financial advice.  Parents will have to judge for themselves whether it is best to give general advice or whether it would be possible for them to take a closer look at their offspring’s finances to suggest where improvements could be made.  It’s also worth noting that while social-media personalities can influence what young adults do with their money, by no means all of them encourage a “spend, spend, spend” approach to life and there is now a decent sprinkling of young-adult orientated content-creators who not only encourage their peers to take a responsible attitude to their finances, but actively give them tips on how to do so.  Parents may therefore want to see if they can point their children in the direction of these peer influencers.

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