Dealing with student debt after graduation is tough. High loan balances and monthly payments can make it difficult for you to make ends meet. They can even cause you to put off pursuing other goals, such as getting married or buying a home.
However, an updated report on the financial health of young Americans highlights how serious millennial debt has become. Young Invincibles, an advocacy group, found that young people with student loans have fallen far behind their parents’ generation when it comes to financial health.
Study results on millennial debt
In the report, the Young Invincibles compared the wealth of current 25- to 34-year-olds to the same age group in 1989. Millennials earned lower incomes, were less likely to own a home, and had a lower net worth than their parents’ generation.
One of the most important factors affecting millennials’ debt and net worth is student loans. When the organization looked at college graduates and subtracted their debt from their assets, it found that the group has a median net worth of -$1,900.
Students who graduated without debt had a much higher net worth, a median $99,000. But, what’s more surprising is how those who never got a college degree compare. Millennials without a degree have a median net worth of $7,900, putting them ahead of graduates with student loans.
Baby boomers, meanwhile, had much higher net worths at the same age. In 1989, the median net worth for 25- to 34-year-olds who had a college degree and debt was $89,143. That’s means their net worth was over $90,000 higher than for the same age group today.
Why your net worth is important
Your net worth is the value of all your assets — such as your savings, retirement accounts, cars, or other valuables — minus your debt. It’s a better indicator of your financial situation than just looking at what you have in the bank or how much you owe.
A consistent increase in net worth, even if it’s a small improvement each month, is a good sign you’re on the right track. Having a positive net worth shows that you potentially have enough assets to cover some emergencies that might pop up. You might even be in a position to start saving for a home or even think about opening a business.
By contrast, if your net worth worsens over time, you might need to make drastic changes to get back on track. One emergency could wipe out what money you do have in the bank, and you might not be able to accomplish your financial goals.
4 ways to improve your net worth
If your net worth is negative or low, you can make changes now to improve it over time. Here are four ways you can boost your net worth:
- Pay down debt: If you have credit card debt, student loans, or auto loans, you can improve your net worth by paying down the balance a little each month. When you’re struggling to make ends meet, paying extra toward your debt might sound impossible. However, you can do so by launching a side hustle to earn more money or by directing every windfall to debt repayment.
- Boost your savings: Adding to your savings will help your net worth, too. Set aside a portion of each paycheck for your emergency fund. If your employer offers a contribution match, make sure you’re contributing enough to your retirement savings to take full advantage.
- Consolidate your debt: If you’re overwhelmed with credit card debt, consider consolidating your debt with a personal loan. You could qualify for a low-interest loan, which can help you pay off the debt faster and save money.
- Refinance your student loans: If your student loans are your largest burden, one option that can help is refinancing your debt. By refinancing, you work with a new lender to take out a new loan for the same amount as your old ones. The new loan could have a lower interest rate, smaller monthly payment, and a different repayment term. Although refinancing does have its drawbacks, particularly if you have federal loans, it can be a useful tool to help you pay off your debt sooner and save money. Find out how much you could save with our refinancing calculator.
Managing your student debt
Dealing with student debt can make it more difficult to get ahead, and it can negatively impact your net worth. However, by researching your options and coming up with a plan, you can start improving your net worth and financial health.
If you’re overwhelmed by student loans and don’t know where to start, sign up for our app for free assistance.
Interested in refinancing student loans?Here are the top 6 lenders of 2018!
|Lender||Variable APR||Eligible Degrees|
|Check out the testimonials and our in-depth reviews!
1 Important Disclosures for Earnest.
To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Earnest fixed rate loan rates range from 3.89% APR (with Auto Pay) to 6.97% APR (with Auto Pay). Variable rate loan rates range from 2.47% APR (with Auto Pay) to 6.30% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of Month/Day/Year, and are subject to change based on market conditions and borrower eligibility.
Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.
The information provided on this page is updated as of 08/21/18. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, email us at email@example.com, or call 888-601-2801 for more information on ourstudent loan refinance product.
© 2018 Earnest LLC. All rights reserved. Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by or agencies of the United States of America.
2 Important Disclosures for Laurel Road.
Laurel Road Disclosures
APR stands for “Annual Percentage Rate.” Rates listed include a 0.25% EFT discount, for automatic payments made from a checking or savings account. Interest rates as of 11/8/2018. Rates subject to change.
Variable rate options consist of a range from 3.27% per year to 6.09% per year for a 5-year term, 4.64% per year to 6.14% per year for a 7-year term, 4.69% per year to 6.19% per year for a 10-year term, 4.94% per year to 6.44% per year for a 15-year term, or 5.19% per year to 6.69% per year for a 20-year term, with no origination fees. APR is subject to increase after consummation. The variable interest rate will change on the first day of every month (“Change Date”) if the Current Index changes. The variable interest rates are based on a Current Index, which is the 1-month London Interbank Offered Rate (LIBOR) (currency in US dollars), as published on The Wall Street Journal’s website. The variable interest rates and Annual Percentage Rate (APR) will increase or decrease when the 1-month LIBOR index changes. The variable interest rates are calculated by adding a margin ranging from 0.98% to 3.80% for the 5-year term loan, 2.35% to 3.85% for the 7-year term loan, 2.40% to 3.90% for the 10-year term loan, 2.65% to 4.15% for the 15-year term loan, and 2.90% to 4.40% for the 20-year term loan, respectively, to the 1-month LIBOR index published on the 25th day of each month immediately preceding each “Change Date,” as defined above, rounded to two decimal places, with no origination fees. If the 25th day of the month is not a business day or is a US federal holiday, the reference date will be the most recent date preceding the 25th day of the month that is a business day. The monthly payment for a sample $10,000 loan at a range of 3.27% per year to 6.09% per year for a 5-year term would be from $180.89 to $193.75. The monthly payment for a sample $10,000 loan at a range of 4.64% per year to 6.14% per year for a 7-year term would be from $139.65 to $146.76. The monthly payment for a sample $10,000 loan at a range of 4.69% per year to 6.19% per year for a 10-year term would be from $104.56 to $111.98. The monthly payment for a sample $10,000 loan at a range of 4.94% per year to 6.44% per year for a 15-year term would be from $78.77 to $86.78. The monthly payment for a sample $10,000 loan at a range of 5.19% per year to 6.69% per year for a 20-year term would be from $67.05 to $75.68.
However, if the borrower chooses to make monthly payments automatically by electronic funds transfer (EFT) from a bank account, the variable rate will decrease by 0.25%, and will increase back up to the regular variable interest rate described in the preceding paragraph if the borrower stops making (or we stop accepting) monthly payments automatically by EFT from the designated borrower’s bank account.
3 Important Disclosures for SoFi.
4 Important Disclosures for LendKey.
Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
5 Important Disclosures for CommonBond.
Offered terms are subject to change. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900). If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown.
All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate. All variable rates are based on a 1-month LIBOR assumption of 2.28% effective October 10, 2018.
6 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|2.47% – 6.99%3||Undergrad & Graduate|
|2.47% – 6.30%1||Undergrad & Graduate|
|2.51% – 8.09%4||Undergrad & Graduate|
|3.02% – 6.44%2||Undergrad & Graduate|
|2.69% – 7.21%5||Undergrad & Graduate|
|2.79% – 8.39%6||Undergrad & Graduate|