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Financial Planning > College Planning > Student Loan Debt

Millennials doing better than prior U.S. generation, paper shows

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(Bloomberg) — In spite of — or thanks to — the worst recession in the post-World War II era, the kids are alright, conclude economists at the Federal Reserve.

Compared with young adults from the generation prior, so-called Millennials in 2010 were more likely to own homes and retirement accounts and have bank deposits, according to research published this month by Lisa Dettling and Joanna Hsu, economists at the Fed in Washington. With the exception of student debt, liabilities are down for today’s young adults.

While Fed Chair Janet Yellen has pointed out that young adults are ‘‘shacking up with their families and probably would like to be going out and acquiring places of their own,” Millennials are doing better on many measures than either older Americans or their counterparts a generation earlier. At the same time, they may also be better equipped to deal with economic swings than previous generations, the Fed paper found.

Millennials, the name given to those born between 1979 and 1995, are less likely to be credit constrained than Generation X, which includes those born between 1965 and 1978. They’re also less likely to be late on payments or have high payment-to-income ratios, the research showed.

Still, young adults haven’t escaped unscathed from the recession. They’re less willing than their older counterparts to bear risk in financial investments since 2001, the paper found.

There’s also a greater chance they carry student loan and housing debt, a sign that such borrowing may be substitutes for the credit card and auto debt that young adults from the generation prior were more likely to have, according to the paper.


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