This piece was originally published at MarketWatch.
The kids still aren’t alright.
Despite economic and stock market gains over the past nine years, many young adults are still struggling to get ahead in their financial lives and, in some ways, things may have actually gotten worse.
Americans age 25 to 34 with college degrees and student debt have a median net wealth of negative $1,900, according to a report analyzing 2016 Federal Reserve data released Thursday by Young Invincibles, a young adult advocacy group. That’s a drop of $9,000 from 2013, YI’s analysis found.
Though it’s likely that these young adults with college degrees will ultimately pay off their student loan burden, the report captures a moment in time when servicing student debt may pose an obstacle to this group’s other financial goals, like saving for retirement or a home.
“The economy is supposed to be doing really, really well,” said Tom Allison, the deputy policy and research director at YI and the author of the report. “But these short term gains are barely making a dent on young people’s long term plans.”
It’s hard to say exactly why the median net worth of young adults with college degrees dropped during this period, but Allison speculates that one reason may be that in 2016, student debt accounted for a larger share of overall debt for these young people than it did in 2013. And unlike other types of debt, such as a mortgage, student loans don’t come with an asset that could apply on the other side of the net wealth equation.
A generation that entered adulthood during an economic downturn
The paper is just the latest evidence of the financial challenges faced by a generation of people who came into young adulthood during a major economic downturn.
Compounding the challenges of finding a first job amid stagnant wage growth — and, for some older millennials, a high unemployment rate — today’s young adults are the first cohort for which student debt is a necessity for most who pursue a college degree. About 70% of bachelor’s degree recipients graduate with student loans.