The Growing Debt Load…A Millennial Dilemma

As our guest expert series continues today as we talk with Maya Enista, CEO of mobilize.org.  Mobilize.org is a national Millennial-led organization with the mission to improve the way democracy works by investing in Millennial-driven solutions.  Mobilize.org is no stranger to the rising costs of higher education and one of the first organizations to introduce me to the rising debt load of graduating college students.  To be honest, I am one of the fortunate ones whose parents paid for my education and as a young parent I wonder how we will provide the same blessing to our kids.  Read on for my discussion with Maya and her thoughts and reactions to our recently released white paper – The Millennial Generation Today.    

Q: Our research mirrors your organization’s research in regard to the average debt load of graduating college students being in the $20,000 to $22,000 range.  How does the debt load differ from previous generations and what is the impact on the Millennials?  

A: Comparing the Millennial debt burden and that of past generation’s is like comparing apples and oranges, due in large part to external factors such as an increase in cost of living and increased education costs. Millennials are facing unique challenges in terms of their debt, and it’s important to note that while there are always exceptions to the rule, Millennials are not in debt because they own too many clothes, or are addicted to Starbucks. Millennials are in debt because of the skyrocketing costs of higher education (tuition, housing, books, etc.) and the costs associated with healthcare. It’s important that we don’t paint this generation with a careless, apathetic brush, but instead – as hard working young people who are making important choices for their future, and dealing with the consequences, both positive and negative. At Mobilize.org, our work focuses on empowering and investing in Millennials to address critical social problems, and I am happy to report that this is a generation (my generation!) that is above all else, resilient, collaborative and entrepreneurial and I am certain that the challenges that are faced (financial, employment, etc.) will be overcome.

Q: Our research found 61% of graduates graduated with some debt?  Within your work with the Millennial generation do you find this statistic high, on average or low? What are your thoughts on this statistic?

A: I’m surprised that you found that only 61% of Millennials graduated with some debt. With 77% of 4-year college students and 42.5% of community college students applying for financial aid, it is a rare scenario for Millennials today to complete their post-secondary education without some financial assistance, and for many, loans are the best option. I encourage Millennials to look into the resources that their schools (and their states) offer, and maximize the dollars available for their education. If you’re applying for college, considering applying for college, etc. please check out information on the FAFSA (http://www.fafsa.ed.gov/) and find out more information about the loans, and scholarships that you may be eligible for. Today, more than ever, the United States is a heavily focused on skills-based service oriented jobs. By 2018 our economy will create 46.8 million job openings, according to the Center on Education and Workforce. Nearly two-thirds of these 46.8 million jobs will require workers with at least some college education. Mobilize.org believes that higher education is becoming less of an option and more of a serious path to financial stability. The debt is burdensome, the costs are prohibitive at times, but the education is priceless.

Q: The Millennials are projected to make up almost 50% of the workforce around 2016 – what are the biggest challenges they will face as they continue to grow their careers or start their careers?

A: As I was growing up, my mom always told me that if I was lucky enough to find a job that I loved, I’d never work a day in my life. She was right, and I was lucky to find Mobilize.org.  I have the privilege of working in a flexible, passionate, entrepreneurial organization and I hope all Millennials are lucky enough to find that job that allows them to never work a day in their lives. However, the tension between the entrepreneurial, flexible organization and company and those that are set in their ways, rigid and reluctant to change, present a tension for the creative and collaborative Millennials entering the work place.  It’s important here to also point out that Millennials aren’t a different species, and they will face many of the same challenges growing their careers as other generations did – questioning authority, balancing work and families, etc. Just as other generations (and each individual) have arrived at a balance that suited their own lives, Millennials will as well.

Q: Our research found that many Millennials are in limbo with almost half being in a job they did not want to be in.  Do you think this generation is underemployed? Looking in your crystal ball, do you think this is temporary or the new normal for young workers?

A: Millennials are young, early in their careers, and exploring their interests and passions. Our parents generation (Baby Boomers) had an average of 2 – 3 jobs over their lifetimes, and it’s said that Millennials will have an average of 15. The workplace is changing, as is the definition of a career and a meaningful contribution in society. I do think this dissatisfaction, or period of exploration, is temporary and I think it’s natural. Pair that with the economic depression, where Millennials (and everyone else) were hard pressed to find a job, much less one they loved, you have a unique set of circumstances that welcomed this generation into the workplace. This generation is certainly facing unique obstacles in their employment, which double digit unemployment numbers for the general population, spiking for minority Millennials. The focus, of the public sector, must be on creating jobs for this generation (and all generations) that take into account the new industries that are strengthening America’s economy.

Thank you Maya for taking time to share your thoughts.  You can check out the organization at http://www.mobilize.org/.

Planning for the Future – Guest Interview Re: New Millennial Research

For the next few weeks I will posting a question and answer format with experts in different fields to dive deeper into the results of my research.  We will discuss movement in the market, social entrepreneurship, high cost of education and more. 

For our first “Expert Conversation Series” we are talking with Shay Prosser.  Shay is the co-founder and lead trainer of Get It Together Today. Get It Together Today is a leader in independent financial and legal education. They offer workshops, trainings and mentoring to help all of us manage the business of life. Shay’s new book, authored with her business partner Hallie Hawkins, is now available at www.nowgetittogether.com.  The book is titled Get It Together: The Real-World Money Guide for Graduates.

Q: Our research shows only 41% of the Millennials make saving for retirement a priority? How does this strike you – better than you have seen in recent years or worse?

A: Your research seems to be in line with what I would expect, and frankly it is probably a greater percentage than the % of people in the average population that made saving a priority before the recession. The Millenials are seeing what is happening to older workers and have experienced layoffs firsthand, and as you state in your research, they have found out that it is not pretty. I think in recent years they have become even more aware of the need to take care of yourself and save for a both a rainy day and for the inevitable, getting older. Of course I would love to see an even higher number think saving for retirement, but given their current age and how far away retirement can seem 41% is pretty good. What is also encouraging is that they are looking more closely at benefits that companies offer. For many companies benefits are a place they can be competitive, and retirement is often a centerpiece of those benefits. By simply taking advantage of the opportunity to save some, hopefully with an employer match, a Millennial can get well on their way to financial security.

Q: Can you provide a few tips on how to prepare for retirement for those in their 20s?

A: The best tip I can give about preparing for not only retirement, but your financial life, is to educate yourself. Students are taught algebra and foreign languages in schools, but very often are not taught basic financial skills. Dealing with your own financial life is something everyone has to do throughout their life. So start out right by understanding the basics. Once they understand the basics they are in a far better place to make good financial decisions. From what we have seen with our older clients, many downfalls have been from simply not understanding what they were doing, the options or the possible consequences. Here are a few tips to get started:

1. Manage your credit, don’t take it for granted – build a good credit rating by understanding what good credit is and how to maintain it.

2. The why is just as important as the how much – know why you are making a decision, and what it will give you both tangibly and intangibly. Then make the decision. Your research on higher education is a great example of this – if you are going to go back to school, or attend a pricier school, calculate how much more you will make and compare that to the student loans or savings you will need to spend to get there. And ask yourself, is it worth it?

3. Make choices – sounds simple, but it is important. Decide what you want and make a plan to get there. And make retirement part of your plan. Financial security is something that will help you weather the next downturn, and allow you the opportunity to direct your own life.

4. Start saving now – no matter how little it may seem that you can save now, it can make a big difference. The longer your money has to grow, the more money you will have when you need it.

Q: What advice do you have for graduates struggling with paying back loans and balancing saving for retirement.

A: I would say, do three things at once – save for the short term, save for retirement, and pay off your loans. No one thing is more important than the other. You can pay down your debt and save for both the long and short term all at once. The best way to do this is to separate your money into “buckets” and create a goal and a monthly contribution amount for each bucket. Think in percentage of your income rather than dollars. For instance, if you are making $40,000 and can put away 20% toward debt and savings (which is ideal) you have about $7000 (after taxes) to put away. If you pay $250 toward student loans each month you will have $4000 to put toward short and long term savings, which I would split evenly until you have 6-9 months of living expenses in your short term saving.

And of course there is more on all of this in our book Get It Together: The Real-World Money Guide for Graduates. Check it out on www.nowgetittogether.com

Thanks Shay for taking the time to comment on our research and provide practical advice for Millennials navigating the world of work and life!

Up next for our blog – we talk to the CEO of a staffing, recruiting and consulting agency on the movement in the market. Look for that post by the end of this week. Remember you can download The Millennial Generation Today white paper from www.sbrconsult.com. Click on the research tab.

A Generational Leadership Vacuum?

Recently I co-presented at an event with a Dean of a Liberal Arts program on how colleges and universities are teaching students differently today and the impact that has on companies regarding development, training and work performance.  Keep in mind, for the most part, when we discuss traditional college students we are talking about the Millennial generation (born 1980 to 2000). 

But what our presentation was about is not nearly as important as the question I was asked by another academia at the end of the program.  The question was about the leadership vacuum being created within the Millennial generation.  Specifically the attendee wanted to know my thoughts on how the Millennial generation would lead one day and if we have a generation that will not be able to lead well. 

I’m not exactly sure how I answered because to be honest I think the question may be premature.  Isn’t it natural for an older generation to wonder and question – out loud – if the generation younger than them will be able to take their place one day?  When Generation X entered the workforce didn’t the Baby Boomers and Traditionalist question if we would have the work ethic to show up on time, day in and day out (remember they did call us ‘slackers’).  Now the Xers can’t wait for the Baby Boomers to hurry up and get out of the way so it can finally be their time to be in charge. 

And when in your 20s don’t you naturally make mistakes when it comes to leading or even working with your co-workers, typically your peers, and begin to develop your leadership style in the early part of your career?  Is there an expectation being set today that the Millennials should be able to graduate one day and shortly after assume the helm of a team, project or division and be successful at it?

When we discuss a leadership vacuum, is there really one?  If you look around your company how many people do you think would like to move into a leadership role? Could you make an accurate assessment that is not solely based on your subjective opinion?  And of those ready for a leadership role which ones have been trained, coached, mentored and held accountable for developing their leadership skills?  How many have received accurate and timely feedback on their behaviors and abilities?    

How many Millennials are receiving this kind of training and development now?  If you want them to lead for some future “tomorrow” don’t you need to invest in them now?

April 2010: Recent Study Reveals Job Security More Important Than Pay and Benefits for University Students

A recent survey conducted by KPMG*, a global network of firms providing audit, tax and advisory services, found that more than 75% of those polled considered job security their top priority when searching for a job as a result of the uncertain economic environment. The survey also found that 67% said they were more likely to work for a public or non-profit organization than a corporate business due to the recession.

These findings correlate with my recent research findings on the impact of the recession on the Millennial generation in which 55% either do not plan to work for corporate America or are unsure, defined in the survey as more than five years. The plans for the future mentioned were starting a business, going into government or non-profit work.

According to the KPMG survey, factors most important to students when choosing a future employer include:

• Real opportunities to learn new skills and develop themselves personally and professionally
• Challenging and exciting work
• Working with and learning from talented colleagues

These attributes have been shown to be consistent definers of the Millennial generation before the recession but I believe, as this study shows, the Millennial generation is holding tighter to the attributes they believe in. The Millennial generation is known to be a group that wants to understand the “why” behind the work they do and how they and their work fit into the larger picture. They want to work for a company that helps its clients and the communities they serve. They want to continue to grow their knowledge and skills and enjoy working in teams.

But how this generation defines loyalty is still very different from how older generations have defined it in the past. The KPMG survey found that 55% of respondents said they might stay with their first employer for two-to-four years. Companies know that at that three-to-five year mark employee start becoming valuable and losing them at this point impacts a company in many ways.

Regardless of the economic environment, companies need to begin looking at the culture of the organization and making significant changes to retain this talent beyond the two-to-four years mark. Companies should be considering how career paths, job expectations and how to get ahead (read promotion) are discussed with young new hires. In addition companies need to focus on incorporating the option to be considered for a stretch assignment or job/department rotation and instituting (whether formally or informally) ways to get employees connected with an internal mentor or career advisor. Failure to act now will negatively impact a company’s growth and talent retention well into the future.

*About the KPMG study: Over 350 university students were surveyed that are involved with programs sponsored by Students in Free Enterprise (SIFF), a global non-profit group active on college campuses. The survey was conducted at the recent SIFE World Cup held in Berlin. The survey results were released March 9, 2010.

Noteworthy: It’s no April Fools joke…Ira Wolfe’s blog – Geeks, Geezers and Googlization (April 1, 2010) discussed the SBR Consulting research findings regarding the impact of the recession on the Millennial Generation. Please click here to access the blog post.