From the News You Can Use Archives 06/11/07

Got Debt? Live With It

Most Americans expect to live with more and more debt throughout all stages of their lives. That is the conclusion of a recent study, Living With Debt: A Life Stage Analysis of Changing Attitudes and Behaviors commissioned by LendingTree^®.

The study examined six distinct age and family-structure groups to learn more about how consumers are living with and managing their debt:

• College students (17-27 years old)
• Young singles (under 35 years old)
• Young families (under 35 years old)
• Mature families (45-64 years old)
• Empty nesters (45-64 years old)
• Seniors (65 years and older)

The executive summary of the report includes findings relevant to the student financial aid industry:

Key Findings: Across All Life Stages

• Living with increasingly higher levels of debt has become an accepted and normal state of affairs considered an inevitable and likely permanent feature of everyday life.
• Many people attribute their willingness to go into debt or to take on additional levels of debt directly to a dramatic increase in spending on children and grandchildren.

Key Findings: College Students

• The rising costs of higher education, coupled with decreases in many families liquid savings, have led to increasing dependence on educational loans and other forms of borrowing. This contributes to a cognitive disconnect for students between the reality of their current incomes and what constitutes an affordable lifestyle.
• Students are not embracing the traditional or old-school financial values of their parents and grandparents that place emphasis on saving, living on a budget, and self-denial. Instead, intense competitive consumption pressures on college campuses, which are exacerbated by increasingly easy access to consumer credit, has substantially increased the social acceptance of increasing levels of personal debt. Many students view use of consumer credit as a reward for their hard work at school.
• The lack of widespread or formal training/education about personal finance in high schools and colleges contributes to a sense of complacency among students, who are not aware of the long-term consequences of their reliance on credit, including its effect on their credit scores. Even so, their desire for more formal personal finance education is explicit, especially among those whose learning curve has matured.

Key Findings: Young Singles

• Young singles find themselves entering the job market with increased levels of existing debt (both student loans and consumer credit) than previous generations. Their resistance to adhering to a budget based on current income contributes to the continued waning influence of traditional or “Puritan ethos” financial values.

Key Findings: Mature Families

• The competing realities of under-funded retirement programs and the increasing costs of college for their children are a source of tension for mature families. The resolution of these competing demands will profoundly influence the timing and quality of life in their future retirement.

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Living With Debt: A Life Stage Analysis of Changing Attitudes and Behaviors - commissioned by Lending Tree.

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Story posted June 11, 2007.

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