This article was originally posted on Forbes by Neale Godfrey
If you asked a typical Millennial what troubles them the most, you’d be hard-pressed to find terrorism, climate change, or even unemployment at the top of the list. So, what is their biggest concern? DEBT.
With Millennials, between the ages of 18-34, numbering 74 million strong and surpassing Baby Boomers as the largest living generation, maybe it’s a good idea for Baby Boomers to rally around Millennials before they sink deeper and deeper into the indebted abyss. So, what is the main source of debt? Student loans are crippling our youth. In a recent Forbes [article](http://www.forbes.com/sites/maggiemcgrath/2014/12/10/student-debt-as-an-asset-class-a-1-trillion-opportunity/) by Maggie McGrath, “…outstanding student debt in the U.S. has ballooned – $1.2 trillion and counting — and rates of home-buying, marriage and child-bearing among young adults have gone in the opposite direction…”
According to [Bankrate](http://www.bankrate.com/finance/student-loans/student-loan-debt-swamping-millennials.aspx), Millennials who are carrying these debt burdens experience hardship because, “Falling into debt can cripple your prospects for long-term financial health…” When asked to discuss other outcomes with this high debt burden, Michael Guillemette, Ph.D., CFP, explains that, “Once you can no longer pay your debts, the true damage begins. Perhaps your credit score takes a tumble. Or maybe you lose your home to foreclosure. Even worse, runaway debt can create pressures that rip apart families.” Also, according to [Bankrate](http://www.bankrate.com/finance/debt/debt-settlement-on-student-loan-debt-1.aspx), “More than 1 in 7 federal loan borrowers default within three years of starting repayment.”
This debt for Millennials may also cause them to suffer from low credit scores and overall reduction of future access to borrowing, according to [U.S. News & World Report](http://www.usnews.com/opinion/economic-intelligence/2015/05/21/millennials-the-subprime-generation-pose-a-paradox-for-policymakers). It would be really unfortunate if this emerging generation gets dubbed, “Generation Subprime“ as the article indicates. We are all too familiar with the effects of how lending and borrowing can contribute to economic meltdown.
According to a survey conducted by [Accounting Today](http://www.accountingtoday.com/news/Debt-Biggest-Concern-Millennials-66839-1.html), “Forty-two percent of millennials said their debt is ‘overwhelming,’ twice the rate of Baby Boomers who were also surveyed for the sake of comparison.” By the way, we Baby Boomers do acknowledge the [fact](http://www.usnews.com/pubfiles/USNews_Market_Insights_Millennials2014.pdf) that this generation faces more financial challenges than we ever did. How does this debt affect this generation? Over half are [not yet saving](http://www.accountingtoday.com/news/Debt-Biggest-Concern-Millennials-66839-1.html) for their future.
What can we do to help our Millennials out of this quicksand of debt?
**Tip #1: Understand Credit Scores and Credit Score Management**
Help your Millennial know where they have been before you can help them get to where they want to go. Start with their credit score and credit report. Their credit report contains information about their financial history; how they pay their bills, whether they have been sued or arrested, or have filed for bankruptcy, etc. The credit reporting companies, Equifax, Experian, and TransUnion, sell the information in their report to creditors, insurers, employers and others to use that to evaluate their applications for credit. There is a big move to get the reporting companies to be more responsive to any errors they have made. The [Fair Credit Reporting Act](https://www.consumer.ftc.gov/articles/0151-disputing-errors-credit-reports) is looking over their shoulder.
If your Millennial has not done this yet, help them to order a free copy of their credit report and help them to make sure that it is accurate. According to [CreditCards.com](http://www.creditcards.com/credit-card-news/10-surefire-steps-to-get-errors-off-credit_reports.php), if they find mistakes, they are advised to report these online and in hard copy. I know we all hate “snail mail,” but if you or your Millennial ends up hiring a lawyer for a dispute, hardcopy is the most efficient way to pursue a paper trail. I found it interesting that CreditCards.com also advised to divide each dispute into separate letters. This all should be done proactively and not just when your Millennial is looking for a loan, or worse yet, has just been turned down for a loan.
**Tip #2: Reduce Debt**
We all know that everything is negotiable. The interest rates on student loans may be easier to negotiate than the principal. Loan consolidation or modification programs are a great way to reduce overall interest rates. Your Millennial will have to clearly explain how burdensome the payments are and that they are in fear of default, if that is the case.
According to [Bankrate.com](http://www.bankrate.com/finance/debt/debt-settlement-on-student-loan-debt-1.aspx), if your Millennial has “massive student loans that are impossible to pay back, a settlement may be attainable.” It is going to be hard, but it is worth a try to help your child with this. They will need to explain why they are unable to pay back the loan as it is structured. Usually a lump sum pay-off option is the route to go. According to [FinAid.org,](http://www.finaid.org/) collection agencies are authorized to accept three settlement offers without getting approval from the Department of Education.
**Tip #3: Work On Budgeting**
It is really time for you to help your Millennial come clean with the budgeting facts of life. Start with their pay, NET of taxes, and go step-by-step with each fixed and variable expense. Hey, why not play my “Bill-Paying Game,” as referenced in a recent Forbes [article](http://goo.gl/Q05lIz) written earlier this month?
By the way, a loan payment is a fixed payment. I’m not going to go through the process here, but you must not only make sure their budget is built, but that you are there to support them with a monthly check in.
The Millennial generation has gotten a raw deal with negative connotations like, “Generation Me.” Frankly, I find that offensive to our offspring. As these young people make their way through adulthood, they are carrying an enormous weight. I believe that this encumbrance has caused this generation to really focus on themselves and their situation.
The good news is that, with a little guidance, they can start to relieve some of the pressure. Millennials certainly have all the tools necessary to make smart money decisions. For instance, in a recent[U.S. News Market Trends Report](http://www.usnews.com/pubfiles/USNews_Market_Insights_Millennials2014.pdf) article, Millennials are, “Born into an interconnected world with immediate access to abundant information, these digital natives have widely embraced the ‘infosumer’ identity. With smartphones, Google search and Yelp reviews at their fingertips, Millennials are hard-wired to do their homework before making any decision or purchase.” The article goes on to say that Millennials are not much different than us, when it comes to understanding finances, especially when it comes down to major life events and milestones. They do their research on health care purchases and 529k investments.
Debt is a burden, but with the help of Baby Boomers like you, Millennials can dig out from under the stockpile of loans. The discouraging news is that it won’t be easy, but let the words of Nathan W. Morris keep you going: “The speed of your success is limited only by your dedication and what you’re willing to sacrifice.”
This article was originally posted on Forbes by Neale Godfrey