A Breakdown of Millennial Debt & What the Numbers Look Like Now

millennialsreport

Millennials. There’s never a shortage of hearing about them in the media — whether it’s questioning their work ethic and the negative stereotypes of the “spoiled Millennial,” how many still live at home, don’t use credit cards, or trust banks, Gen Y has been a topic of obsession and fascination.

One glaring hardship Millennials face is debt — student loan debt, to be specific. As nearly two million Millennials graduate from college and enter the job market, they’ll grapple with the impacts of student loan debt on the rest of their financial lives.

Credit Sesame Report: Millennials Don’t Think They’re ‘Entitled’ But Want Student Loans Easily Forgiven

So, what do the numbers look like now?

According to the New York Federal Reserve, total student loan debt in the U.S. currently stands at $1.26 trillion spread among more than 43 million borrowers.

Credit Sesame members ages 18-34 — about half a million total — owe a collective $10.5 billion in student loans. About 41 percent of that debt is owed by those aged 25-34, who owe an average balance of $21,000 each.

StudentLoanDebt-CSData

Credit Sesame’s proprietary data also shows that those groups had lower credit card balances than older Credit Sesame members, but higher credit card utilization (partly because credit limits are often lower for those just starting out in the workforce).

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Your credit utilization is how much you are using, compared to the total amount of credit you have. If you have two credit cards and the total limits for both are $2,000, but you’ve used $1,000 — it means your credit utilization is 50 percent (not good).

Take a look at the startling numbers in our pie chart below, taken from a subset of our 7 million members. It appears that more than half are using 70% or more of their available credit.

Tip: A good utilization rate is 10 percent or lower.

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Credit card utilization for those ages 18-24 is 31 percent with an average credit limit of about $5,700, compared with 20 percent for all age groups. Looking at the 25-34 age group — those more likely to have established employment history — utilization drops to 24 percent and credit limits rise to just over $11,000.

MillennialsCreditUtilization1

The average credit card balance is $1,778 for 18-24 year old Credit Sesame members, and $2,735 for members ages 25-34, suggesting that spending increases as employment stabilizes and income becomes steadier.

Are Millennials buying fancier cars?

Millennials choosing to purchase a car have higher auto loan balances than older age groups. The average auto loan balance for Credit Sesame members under 25 is $12,128, and $10,778 for the 25-34 age group.

MillennialsCarLoans

This could be because younger consumers don’t have a high-value trade-in and thus need to finance more of the vehicle’s total cost, or because they haven’t had time yet to pay down their balance.

Millennials and the job market

A survey from the National Association of Colleges and Employers finds that employers are planning to hire about 5 percent more new college graduates than last year, and the Bureau of Labor Statistics reports that the unemployment rate for those over 25 with a bachelor’s degree is 2.4 percent, less than half of the national average of 5 percent.

A Credit Sesame report card can help you manage debt and track finances over time — giving you the data you need to make intelligent and informed decisions no matter where you are in your financial life.

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Published July 26, 2016
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