The True Story of the Educated and Underbanked in the United States
The ongoing saga of the human race has been one of adapting to circumstances and ultimately overcoming the worst of things. One circumstance that is often difficult to overcome, even for the best of us, is rough financial waters. We have a tendency to think that just because most people are not able to overcome their financial woes that we will still be able to ultimately triumph. This explains why so many American consumers borrow money, save it when they can and ultimately toe the line with their financial doings. We believe that sooner or later, things will pan out and we’ll obtain the “American Dream.”
As monetary inequality continues to grow in the United States – with jobs paying lower salaries and debt increasing – getting an education continues to be important. The money that people borrow for education, however, continues to increase, while people still have less financial stability than ever before. Our cost of living continues to rise every year, and this holds true for students who are in school and borrowing a lot of money to finish their educations. And this makes getting started in life after school especially difficult for some.
As more people are seeking higher education, so too are the number of “underbanked” people on the rise. You may be familiar with unbanked households; the folks who don’t or can’t make use of traditional banking services. Underbanked households are the people who may have a bank account, but they have poor access to traditional banking services. These folks will usually use cash or credit sharks and often choose to get loans from payday lenders, short term lending companies or other alternative loan providers.
As these trends continue to increase, there are more young people who are also taking out very large student loans. These loans need to be repaid while graduates are in the very early stages of their post-education careers. Nearly 66 percent of Generation Y have almost no credit records to speak of. Taking things a bit further, the younger folks who do have a credit record may have no form of savings and no one to turn to if they run into a true financial emergency. Living a life where you are underbanked and owing a lot of money to lenders can make a huge impact on someone’s immediate financial future and all financial decisions that are made in the future.
According to a report by some researchers from the School of Business at George Washington University, “While this generation is young, ambitious, educated, and optimistic, many Gen Y’ers lack adequate personal financial management skills. As a result, they face the grim reality of long-term debt related to higher education, expensive spending behaviors, and credit cards.” These researchers contend that the rising costs of education and poor financial literacy on the part of students combine together to contribute to the bottom line of nearly a third of the younger generation having more than two longer-term outstanding debts, like student loans and mortgages.
Getting started after school is tough enough for people. The challenges that today’s students are facing are making it even harder to get started in life and to achieve a bit of financial stability and success. However, the way the system is set up in this country, not pursuing a higher education is almost a guarantee for financial failure. Young, underbanked Americans need to do everything they can to save up money for college in order to avoid having long-term student loan debt to contend with after they graduate.