Thursday, August 11, 2011

Causes of Debt in Young Adults

Causes of Debt in Young Adults

More and more, young adults are starting out in their early twenties under a mountain of debt unrivaled in previous generations. Black Enterprise reports that the average debt load in American households is at least $15,788. The causes of the accumulating debt in young adults may vary depending on each individual's unique circumstances, but there are common threads that link many young adults who are getting in debt and finding themselves stuck in debt for years.

College Debt

    The cost of a college tuition seems to rise with each year. Even as young people are realizing that the benefits of a college education can serve them well throughout life, those same young people are also struggling with how to pay for the college education they seek. Despite saving and working throughout their school years, many students find they are unable to bridge the gap to pay for tuition, books, fees, and living expenses. As a result, many students apply for student loans and payment plans with accruing interest. According to tfgi.com, a student may graduate from college with anywhere between $5,000 and $100,000 of student loan debt.

Availability

    Another reason so many young adults become burdened under the weight of debt is because debt has become much more acceptable and much more accessible in recent years. It's not uncommon to find credit card representatives stationed on college campuses to sell students on the benefits of signing up with a credit card company. Online applications, telephone applications,and instant approval of store credit cards make it quick and easy for young adults to obtain a new credit card or store charge account without even thinking.

Outside Pressures

    Actnow.com indicates that many young adults may be going into debt in part due to outside pressures. Societal pressures manifested through the fashion industry, the entertainment industry and individual peer pressure send the message that young people have to have certain things in order to be happy, accepted and successful. Young adults who are still forming their individual identities are often more susceptible to these messages, and they are often more willing to go into debt to obtain those things.

Poor Education

    Many young adults go into debt and stay in debt for many years simply due to a lack of education about their finances. Credit card companies often charge high interest fees, late payment penalties, and annual maintenance fees that can increase the initial account balances. Young adults who are unprepared and untrained can easily be caught off-guard by these tactics and may end up driving themselves further in debt for years to come.

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