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Are Millennials Being Desensitized to Debt?

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Much has been written about the Millennial generation and the opinion that they have entitlement issues and an impaired work ethic. Such opinions can only be evaluated by those with a formal education in sociology. Noting, however, that we are all "products of our generation," an interesting question does arise as to whether or not our young Millennials are being conditioned to carry large debt loads and may have become desensitized to debt as a result. If such desensitization has occurred, what does that hold for our economic and social future as a society?

So, are our Millennials being taught that large debt loads are a normal component of modern life? A recent survey released by the RBC suggests it is certainly a well entrenched reality for many Canadians. The survey reported that three-quarters of Canadians are in debt to a national average of $15,920. This amount was up a whopping 21 per cent from 2012 and it did not include mortgage debt. This, of course, is the cultural context in which our Millennials have been raised.

Of course, this young age group is also facing a confluence of issues specific to their generation that could compound any desensitization they may have to huge debt loads. Consider post-secondary tuition costs, which have skyrocketed from an average of $1,464 in 1990-91 to $6,348 in 2012-13.

According to the Canadian Federation of Students, the average student debt after an undergraduate program is now $27,000, requiring 10 years for many to pay off. As undergraduate designations are often insufficient to gain employment, many accumulate much more debt than this, pursuing additional education and prolonging their repayment burden. It's a daunting reality that would lead many to become resigned to carrying massive debt. After all, these financial burdens are taken on before these young individuals have the opportunity to get married, buy a home or car, or assume the additional financial demands of their adult lives.

Their debt desensitization can be heightened when confronting the labour market after graduation. A sluggish economic recovery in Canada since the 'great recession' has found many post-secondary graduates either without work, or underemployed, after accumulating that record high student loan debt. In fact, Statistics Canada reports that one in four Millennials with a university degree has a full-time job that does not require their level of education. The CBC story reporting on this issue commented that "young adults who had practical goals of being lawyers, teachers and medical care workers...(are) having to settle into low-skilled jobs that can barely cover their bills and multiple-degrees-worth of student loan payments."

Add to this mix of labour market woes is the consumer culture to which Millennials have become accustomed. While they face daunting student loan debts and employment challenges post graduation, many still prioritize having the latest iPhone, tablet, or tech 'necessity'. Our western culture has arguably skewed the concept of a 'need' versus a 'want'. This disconnect is promoted globally in the marketing campaigns of retailers, let alone in the lifestyles idealized in mainstream music, fashion, magazines and movies.

Faced with the daunting debt realities of modern society, one has to wonder how Millennials will respond as they go forward with their lives. Have they become so desensitized to huge debt burdens that they will push our national debt-to-income ratio to boldly go where it has never gone before? Or will the crushing burden of not only their own debts, but that of the country's, forge a wilful return to more conservative financial approach seen in decades past?

Some believe it is the latter, since Millennials "saw their parents take such financial setbacks during the crisis and subsequent recession". In fact, a panellist that participated in a discussion held by the Council for Economic Education has suggested that Millennials are "the second-most conservative group of investors, right behind their grandparents."

Other research, however, shows that Millennials have an "above-average propensity to identify themselves as spenders." Indeed, it has been predicted that by 2017, Millennials will be "outspending baby boomers, according to new survey conducted by Berglass and Associates and Women's Wear Daily." It seems this young age cohort likes to shop frequently, regardless of student loans and underemployment.

Faced with daunting student debts, an increasingly competitive job market and global economic changes, time will tell how our Millennials adapt to the debt culture they have been raised into. While their spending is desired by our Canadian government, as it tries to prop up our sluggish economy, let's hope this generation is not overly programmed for debt. Their ability to support that debt and enjoy quality of life could be jeopardized if they are and that could spell some undesirable changes to our social identity.