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Rising Debt Plagues Young Americans


Over the last decade, debt among America's youth has increased by 55 percent. The average college student owes $2300 in credit card debt and more than $20,000 in student loans. As VOA's Crystal Park explains, debt is a tricky trap that may be crippling America's youth.

Twenty-four-year old Aneesa Din is feeling a pinch. Monthly expenses such as food, rent and bills are taking a toll on her wallet. She said, "This week I am cooking at home every single day until Friday because I have like $30 to last me to last week, until I get my paycheck."

Din lives in a group house, located in Washington, D.C. with three other women in an effort to defray the high cost of living in a metropolitan area.

Her situation is not unusual for recent college graduates, who find themselves under a mountain of debt after obtaining a college degree. The average American student graduates from college with more than $20,000 in debt according to federal loan company Nellie Mae. Din graduated from the University of Maryland two years ago with a huge amount of debt from her student loans.

She said, "I kept thinking once I graduate I'm gonna get that full-time job and have that paycheck coming through and it's gonna be a lot more money than I make now so things will be so much easier. Yet for some reason they weren't. They're actually harder."

One reason things might seem harder is because of a weak labor market, according to Christian Weller, a senior economist at the Center for American Progress in Washington, D.C.

"Part of it is a weak labor market for the last few years, so that made it very hard for new job entrants to get a job. That's particularly true for minorities, but it's pretty much true across the board, but the jobs just haven't been created," said Weller.

The majority of the jobs that are being created are also in lower-paying industries. That means that for many people, the ratio of debt service to income is rising. The public-policy group, Demos, found that between 1992 and 2001, that ratio increased by 28 percent for people between 18 and 34-years-old.

But a weak job market isn't the only factor pushing America's youth into debt. An enormous push by marketers, which encourages mindless spending, hurts American youth who are simply not taught financial responsibility.

Karen Pittman is the executive director of the Forum for Youth Investment. She said, "They don't have the basic information that they need to have to understand saving, understand how to set aside a budget, how to create and manage your finances within a budget. And so financial literacy rates are low. Organizations like NIFTE, the National Institute for Financial and Technical Education provide financial literacy tests for young people online and through schools and find that more than half of them fail those tests."

Most students say they learn money managing habits at home. Olanma Okoji is a medical student who expects to be $200,000 in debt by the time she graduates.

"I definitely think a lot of youth don't appreciate the whole aspect of money managing. I think it really should start from the home. I think the parents should let their kids know the important of money and managing it and not have it be so available and just you can use it and not care about the responsibility", said Okoji.

Christian Weller believes in order to reverse the downward spiral of debt, economic factors need to change. He said,"The overall big picture that we see in terms of debt level for young people is driven by the macroeconomic factors of a weak labor market, rising prices and to get out of that we have to focus on a public policy angle on a stronger labor market- better jobs and more jobs."

Karen Pittman says society as a whole bears some responsibility for educating America's youth about financial matters. She said, "We've got advertising about spending. We don't have nearly as much advertising about saving. So the media is promoting spending among teens and marketing teens, but we're not getting information to them."

For Aneesa Din, paying off those student loans is a burden now, but she believes she's paying for more than just an education. She said, "Growing up my parents always, always pounded into me the value of education and I need a college degree. Not even a bachelor's but I need a Masters. So getting a bachelor's wasn't even a question. So while it was expensive, my father always reiterated it will pay off in the end."

And pay off it does. According to the U.S. Census Bureau, a college graduate will earn double the amount of a high school graduate over his or her working life.

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