Millennials face financial disappointment when student loan relief is suspended

As a Pell Grant recipient, Rapoza qualifies for a $20,000 loan forgiveness under the plan Biden unveiled in August. Combined with the money he’s saved while living with his parents for the past four years, he’d finally be debt-free and able to move out on his own.

Finally, Rapoza thought, his generation of leaders in Washington DC were being heard. Something has finally been done to address the financial fears and woes of many millennials.

He should have known better, he says wealth. The excitement of many federal borrowers was short-lived as Biden’s forgiveness plan was put on hold due to multiple legal challenges from conservative and libertarian groups. His fate now lies with the US Supreme Court.

“I was hooked, who wouldn’t be?” said Rapoza, 31, upon learning of Biden’s debt relief plan. “But why should we get something nice? I don’t think we’re expecting anything.”

Low expectations come with territory when you’re a millennial. The generation that includes those born between 1981 and 1996 has suffered one financial setback after another. They have been hit hard by not one, but two global crises — the Great Recession and the COVID-19 pandemic — so-called “black swan” events that typically occur once in a generation. These events had an outsized impact on her financial life: They later buy houses (if they can even afford it), push back on marriage, and fight over children. They work harder than their parents while being told time and time again that they are lazy and selfish.

Many, like Rapoza, feel like mom and dad pushed them into expensive colleges who told them higher education was the ticket to a better life. But while they are better educated than their parents’ generations, that education has come with a significantly higher debt burden on student loans as college costs soared.

“The possibility of student loan relief dangling in front of them, only to be potentially snatched up, is the latest in a long line of problems,” says Jonathan McCollum, chair of federal government relations at New York law firm Davidoff Hutcher & Citron.

Average wages are still higher for college graduates than non-graduates and those who don’t participate, but they have not kept pace with the cost of living. In addition to record housing prices, many of today’s young adults owe hundreds (if not thousands) of their student loans each month.

“What’s really frustrating is when I hear baby boomers say, ‘Well, I paid off my student loans, why can’t you?’ Without considering the reality that the cost of going to college has more than tripled in 30 years,” said André Perry, senior fellow at the Brookings Institution. “It’s frustrating when you have a group of individuals who are doing whatever they need to do to get a degree so they can support a knowledge-based economy, and yet have to bear a larger chunk of the cost than their predecessors.”

To be too good to be true

When it was announced, Biden’s student loan relief plan offered a glimmer of hope for those feeling trapped by their debt. Instead, millennials can add it to the list of promises that have turned into disappointments big and small, from affordable housing to trying to snag a ticket to a Taylor Swift concert.

take up residence. When federal student loan payments were suspended during the COVID-19 pandemic, some millennials finally found themselves financially stable enough to buy homes, despite record-high prices across the country. Mortgage rates were at record lows, giving first-time homebuyers a brief window in which to keep their money invested. With a little extra money to save each month, millennials could dream of how they would spend if their debt weren’t a factor. Rapoza and other young adults say they will finally be able to save for a home as loan forgiveness continues.

Then, mortgage rates soared this year, coupled with continued record-high house prices, again shutting out many first-time homebuyers.

Millennials can’t even take a break in their free time. If they have enough disposable income to spend on something fun like concert tickets, they still hit walls erected by previous generations. Earlier this month, millions tried to sign up with Ticketmaster to secure seats on Taylor Swift’s major US tour — and millions failed. Would it have been an easier process if Ticketmaster didn’t own LiveNation, a merger that many Democrats, including quintessential millennial politician Alexandria Ocasio-Cortez, now call a monopoly? Impossible to say, but the experience is emblematic of how millennials consistently sit on the short end of the stick: massive debt, low wages, a high cost of living, and a set of Boomer policies that keep them from succeeding and happily.

“It seems like everything hit us,” says Ja’Net Adams, a 41-year-old who has paid off $50,000 in student loan debt and now helps others manage their personal finances. “All of this is interconnected for millennials and impacts their entire financial picture.”

Each setback amplifies the next. Millennials took out student loans to go to good schools in hopes of getting good jobs. But debt prevents many from buying a home, saving, or investing. Given all of this, they have less wealth than baby boomers of the same age.

Soon, they will be caring for their aging parents en masse, creating even more financial strain. The problems are compounded for black and other non-white millennials.

“It’s almost like we don’t want millennials to have a piece of the American Dream,” says Perry.

So Gen Y could use a win. However, Rapoza says the victory is unlikely to come in the form of a student loan levy as Biden is asking the US Supreme Court – which currently consists of six conservative justices and three liberals – to rule on the legitimacy of the program.

“If you’re playing baseball and it’s raining, I wouldn’t expect a good game,” he says.

Still, both Rapoza and Perry say the government must do something to help its citizens. And saying “don’t go to college” isn’t a solution; America needs a well-educated workforce to be competitive, they say.

Rather than just erecting hurdles to halt student loan levies and other Democratic measures, they would like Republicans to come up with some solutions to America’s higher education cost crisis. Rapoza does not give up hope that something can be done to help his and future generations.

“We’ve been sold this myth, but it hasn’t stood the test of time and we’ve got the bag in our hands,” says Rapoza. “Can someone please give us a hand? Can’t you see how badly we’ve got it?”

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