How has student loan debt impacted millennials, and what is the long-term impact on college financial planning for future generations?
This article features an interview with David Carlson, Author of Hustle Away Debt and founder of Young Adult Money. Based in St. Paul, Minnesota, David focuses on personal finance for millennials. His book, Hustle Away Debt, focuses on how millennials that tend to carry a heavy load of student loan debt can get out of their current situation through side hustles. As college financial planning involves saving, paying and repaying the cost of higher education, read this article to learn the current state of college financial planning for millennials and its potential impact on how future generations go about their college financial planning as well. David is also the founder of Young Adult Money, a personal finance website with articles, tips and tools on how to make money, save money and live life successfully. You can learn more about David Carlson, at http://www.youngadultmoney.com/. Last but not least, I would like to thank David for his time, insight and support in working with me on the article. I learned a lot through reading his book and working with him on the article, and think you can too from the article below. Please read the question and answers to learn about his perspective on college financial planning, and hope that the article provides you with an opportunity to learn more from your peers.
Question 1 (Paul Curley, CFA, Editor of the 529 Dash): Student loan debt has been rising on a year-over-year basis. How does this book align with this new college financial planning reality for students and graduates?
Answer 1 (David Carlson, Author of Hustle Away Debt and Founder of Young Adult Money): Student loan debt has exploded the past decade and it’s become the norm for graduates to leave college with over $30,000 in student loan debt. There’s no sign that the cost of college will decrease anytime soon, either, which creates a huge problem for future students and parents of future students.
While Hustle Away Debt is focused on debt that has already been incurred, avoiding future student loan debt or even limiting future student loan debt is an important topic for millions of future students and parents of future students. Most parents don’t want their children to graduate with a debilitating amount of student loan debt, so it forces them to think about how they can help pay for as much of their student loans as possible.
Take a millennial today, perhaps someone who is 28 or 30 who has one kid and another on the way. They very well could be still dealing with their own student loan debt or other debt. At the same time they need to save for retirement and go after other financial goals such as saving for a home, paying off car loans, etc. They may already budget and cut back on spending significantly, which will eventually bring them to the realization they have an income problem. That’s where Hustle Away Debt comes into play.
Hustle Away Debt and the rise in popularity of side hustles absolutely came about from the widespread student loan problem that millennials and other generations are facing, but its underlying thesis applies to any person who needs to increase their income to hit their financial goals. The same approach of using a side hustle for higher income applies regardless of the reason for the higher income, whether it’s to have money for travel, to pay off a mortgage faster, or to help fund a 529 account.
Question 2: Conceptually, the book seemed to cover getting ahead of the debt cycle by raising ones income. In turn and based on their experience with student loan debt, do you think that the next generation will break the college financial planning debt cycle?
Answer 2: I’m optimistic that millennials will at minimum slow the bleeding from the college financial planning debt cycle. Just speaking from my own personal experience of graduating with a large amount of student loan debt, my wife and I would like to pay for as much of our childrens’ college educations as possible.
Being able to help with their college tuition will require significant planning, though, as we recognize our need to save for our retirement as well. But knowing the impact that student loans can have on a graduate makes us more aware and empathetic to how that experience would be for our children.
I think others who have graduated with student loans will be more likely to proactively seek out college savings accounts – like 529s – early on in their child’s life. I’ve had a number of people with children under three years old ask me what my recommendation would be. This is an encouraging sign as they will have time on their side for their savings and investments to grow as their children age.
Question 3: Based on their experience of carrying so much student loan debt, do you think that the current and next generation will place a higher value on financial literacy and financial advisers?
Answer 3: I think that financial literacy is something that those with student loan debt are pursuing and place a high value on. Another force at play is “ignorance is bliss” as it sometimes can be easier to ignore financial problems or challenges than to face them head on. I rarely see people dabbling in the middle – they either want to grow their financial literacy or they have no interest in it.
Because of all the do-it-yourself apps out there I’m not sold that the trend will be towards increased value placed on financial advisers. The trend I’m seeing is people having an interest in talking to someone who knows more than average about personal finances and having them guide them towards additional resources, tools, and apps.
Question 4: Are there any questions that I overlooked?
Answer 4: Where can people find Hustle Away Debt? Who should read it?
Hustle Away Debt can be found on Amazon and is perfect for anyone who wants to increase their income outside of their 9-5. Whether their goal is to pay off your debt faster, save for their kid’s college education, or buy a home, anyone who could use some extra income to reach financial goals would benefit from reading Hustle Away Debt.
Editor’s Final Note: Thank you David Carlson for your time and insight for this article. Also, I would like to provide a special thank you to the readers for learning from your peers, for your support and your engagement.