Millennials Drowning in Student Loans Play Key Election Role
Americans are saddled with more than $1.2 trillion in student loan debt – the most ever. Student Loan Hero says the average 2016 graduate owes more than $37,000.
That’s only part of the problem. The New York Federal Reserve says student debt is the root cause of strapped households where debt trumps assets. Earlier this week it cited the most negative wealth cases are characterized by their relatively large shares of student debt, 47 percent, and mortgage debt, 22 percent.
Additionally, 17% of these millennial borrowers are defaulting on their loans, according to 2015 data from the New York Federal Reserve and only 37% are making regular payments. Thus these balances are not coming down.
These debt laden voters are hoping our next President can find a solution to this epidemic. The Pew Research Center says more than 69 million millennials are of voting age - almost matching Baby Boomers as the largest generation in the U.S. electorate.
Nate Matherson is one of those voters. The 22-year-old CEO/Co-founder of LendEDU graduated from the University of Delaware this year with $57,000 in student loan debt.
"Both Trump and Clinton have interesting, and very different approaches to solving the student loan crisis," says Matherson. "I hope that both sides can agree that we need to invest in personal finance education at the high school level. We shouldn't be sending college freshman into student debt when they haven't learned basic personal finance skills."
Hillary Clinton's platform includes a promise to eliminate 4-year college/university tuition for every student from a family making $85,000 or less. The threshold would climb up to $125,000 by 2021.
"The Secretary has adopted several of the platforms Senator Bernie Sanders was proposing," says David Levy, Editor at Edvisors. "We think that was done in an attempt to attract several of his supporters."
Clinton also indicates she will take an immediate executive action to offer a three month moratorium on student loan payments to all federal borrowers, streamline enrollment in income-based repayment plans, give borrowers the ability to refinance student loans at current rates, push to get employers to contribute to student debt relief, offer an entrepreneurs incentive and a reward for public service.
"The devil is always in the details," says Andrew Josuweit, CEO of Student Loan Hero. "Who's going to end up paying for this stuff? Is it just marketing for the Clinton campaign or are they going to be able to execute?"
At a press conference on July 27, Donald Trump said he plans to release a position on the student loan crisis within the next four weeks. He also added that his ideas may not "fit beautifully within the Republican framework." The GOP 2016 platform calls for the Federal government to get out of the business of originating student loans. Trump campaign co-chair Sam Clovis' interview with the trade journal Inside Higher Ed in May indicated that Trump supports that proposal. In the article, Clovis said other ideas being considered include requiring colleges to share in the risk of loans and discouraging borrowing by liberal arts majors. Emails by FOXBusiness.com to the Trump campaign for comment were not returned at the time of publication.
"This is the first time we've seen such an interest in higher education by both parties," said David Levy, Editor at Edvisors. "I think there will be some initiatives proposed with regards to refinancing and interest rates regardless of who's elected. But the outcome will all depend on the composition of Congress."
Linda Bell joined FOX Business Network (FBN) in September 2014 as an Assignment Editor after more than a decade at Bloomberg News. She is an award-winning journalist/writer of personal finance content. You can follow her on Twitter @lindanbell.