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Millennials at Greatest Risk for Financial Insecurity

By Lisa Lakey
U of A System Division of Agriculture
April 8, 2016 

Fast facts:

  • Student debt weighing heavily on millennials
  • Managing student loans, minizing debt keys to better financial health 

(790 Words)

LITTLE ROCK -- Millennials face the greatest risk for future financial woes over all generations. At least that’s the case according to recent findings released by the Center for Retirement Research at Boston College that looked at the increasing rate of student loan debt and its impact on retirement preparedness. In 2013 alone, the study found 55 percent of households in their twenties had student debt, with an average amount of $31,000. 

The study also reported student loan debt was $1.2 trillion in 2015, compared to $0.2 trillion in 2003, accounting for more than 30 percent of non-mortgage household debt. The study concluded the rise in student loan debt will only add to the already high rate of households not financially prepared for retirement. A similar study released in October by the Pew Charitable Trusts showed that nearly 70 percent of millennials were susceptible to an increasing risk of financial shock due to unexpected life expenses such as job loss or car repairs. The difference between millennials and older generations? A lack of significant savings and too much debt. 

“Millennials may have fewer resources in retirement than previous generations,” Laura Hendrix, an extension personal finance expert for the University of Arkansas System Division of Agriculture, said. “School debt increases future financial risk for young adults who are less likely to save, invest, or purchase a home because starting salaries are low, and extra income is going toward repayment of student loans.” 

Despite the rising costs of education and an enormous amount of student loan debt, financial security is a goal that can, and should, be a reality. For millennials, and anyone who feels they are swimming in debt, Hendrix offers some tips on keeping your head above the financial flood. 

1.  Minimize debt.  When it comes to student loans, the maximum amount offered is typically more than is actually needed. Hendrix recommends only borrowing the minimum amount necessary and looking for the lowest interest rates, as well as considering federal loans over private loans. “Investing in an education is typically considered good debt because it has the potential to increase your future earning potential,” Hendrix said. “Think about your future ability to pay back the loan amount. Using student loans to finance a lifestyle now can lead to financial hardship later.” 

2.  Manage student loans.  For those already facing the challenges of repaying large student loan debt, Hendrix advises contacting your lender to consider alternate repayment options. “Federal loans have programs to revise payment amounts,” she said. “For graduates who qualify, Pay As You Earn caps the monthly payment amount at 10 percent of discretionary income. Graduates who aren’t eligible for PAYE may qualify for REPAYE, Revised Pay As You Earn. REPAYE lowers payments based on income and family size. Non-federal loans sometimes have graduated or extended payment programs for borrowers who are having trouble making payments.” 

3.  Save for retirement.  Saving for retirement isn’t always at the forefront of many young adults’ immediate financial goals. Hendrix said it seems like such a long time away, but the sooner you start, the more time your money has to earn interest. “Saving even a small amount now can add up to a big retirement fund,” she said. “Opt in to your employer provided retirement fund. Some employers match your retirement contributions. It’s free money. Aim to invest as much as possible up to the percentage that your employer will match. Don’t have an employer provided fund? Open an Investment Retirement Account.”

4. Build your credit score.  Hendrix warns the ease of obtaining and using credit can be a potential pitfall for young adults, with long-term consequences for credit scores. “It’s easier to build and keep a good credit score than to recover from a bad one,” she said. “Lenders offer the best interest rates to consumers who have higher credit scores. A lower interest rate can save thousands of dollars over the life of a home or auto loan. If you use credit, do so wisely. Pay bills on time. Don’t max out your credit cards. Keep a limited number of credit accounts.” She also advises checking your credit report every four months with one of the three credit bureaus. Consumers are entitled to a free annual report from each through

 5. Live within your income.  Although one of the seemingly simplest ways to keep finances in check, it is often easier said than done. She recommends creating a spending plan that balances monthly income with monthly expenses. “If you keep coming up short you have two options,” Hendrix said, “either decrease expenses or increase income. Keep a spending journal to identify places you can cut expenses. Look for a second job or work more hours to increase income.”


The Cooperative Extension Service is your source for reliable, research-based information to improve quality of life. Discover the latest recommendations for creating a spending plan, managing credit, building your savings and investing for the future. Learn more at

The University of Arkansas System Division of Agriculture offers all its Extension and Research programs to all eligible persons regardless of race, color, sex, gender identity, sexual orientation, national origin, religion, age, disability, marital or veteran status, genetic information, or any other legally protected status, and is an Affirmative Action/Equal Opportunity Employer.  



Media Contact: Mary Hightower
Dir. of Communication Services
U of A Division of Agriculture
Cooperative Extension Service
(501) 671-2126

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