Plugging the holes of 'generation debt'--ACUC&E coverage

LAS VEGAS (6/5/07)--Author Anya Kamenetz explored three key economic problems plaguing young adults during Monday's "Generation Debt" Thought Leader Session at America's Credit Union Conference & Expo (ACUC&E).

ACUC&E, meeting in Las Vegas through Wednesday, is sponsored by the Credit Union National Association. The problems include:

1. Student loan debt. About 66% of students have federal student loans for postsecondary education--up from 35% in 1993-94. graduates' average debt today is $19,200, double what they owed 15 years ago. Average tuition and fees at a four-year public institution today total $5,491, compared with $2,373 in 1985-86.

The impact of rising educational debt is threefold, according to Kamenetz:

  • Emotional. Of borrowers, 48% say their debt causes anxiety and sleeplessness.
  • Occupational. Of those in debt, 37% of borrowers can't afford to enter social work, while 23% can't afford to teach.
  • Financial. About 55% say their debt obligations limit future retirement savings.

As a result, she said, the U.S. no longer has the world's highest percentage of college-educated citizens, and 400,000 qualified students are priced out of college each year.

2. Credit card debt. Of college seniors, 91% have a credit card, Kamenetz reported. Their average card balance is $2,864. The savings rate for those younger than age 35 is 3.

3. The changing job market. Young people average 9.6 jobs between ages 18 to 32, she said. More than 30% of 19- to 29-year-olds have no health insurance. In addition, entry-level wages dropped 4% from 2001 to 2005.

Credit unions can be part of the solution by:

  • Providing financial education;
  • Offering credit counseling; and
  • Creating savings programs.

Kamenetz said what's needed is the help of parents and peers, a connection to young people through their online communities, and a requirement that young people opt-out of savings programs rather than opt-in.

"Community financial institutions have so much to offer younger members as a source of financial planning information and support," Kamenetz concluded. "They just need to know that you're out there and why you're different."

"Generation Debt" is Kamenetz's first book. She has written for The New York Times, The Washington Post, The Nation, and the Village Voice. In 2004, the Voice nominated her for a Pulitzer Prize in feature writing for her work on the series "Generation Debt: The New Economics of Being Young."

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