Young, Successful…And Drowning in Debt

On the surface, plenty of Boston millennials are earning, spending, and having a blast. But beneath the veneer of $17 margaritas and shopping trips around the Seaport, many are living with debt—and lots of it. Is buying the good life on loan the new normal? Or is it plunging a generation into an early midlife crisis?

Photo illustration by C.J. Burton

Tyler couldn’t wait to get to Ireland. He and three of his buddies had booked a weekend golf trip, a special international edition of their annual guys’ getaway, and scored a great deal on WOW Air, an Icelandic bargain carrier. They were feeling pretty good about the cheap flights—even if for Tyler (not his real name) it still meant a few more months of paying the bare minimum toward his college loans and pushing his already-pushed credit card limit. The day they were set to leave, however, also turned out to be the day that WOW went belly-up. Their flights were canceled; their hotel rooms non-refundable. For Tyler and his friends, though, it was less a sign to abandon ship than to double down. “We had our minds set on going on vacation, no matter what,” he says. So at the last minute they paid a premium for tickets to San Diego, and a premium for a pair of hotel rooms. “I’m not sure we even looked at the cost of anything,” he says. Until, that is, the credit card statement arrived and he saw he’d spent nearly $3,000. “It was a ton of fun, though,” he says, laughing.

Tyler is 26 and makes nearly $100,000 a year at his job in tech sales. He graduated from the University of New Hampshire with about $45,000 in student loans, and most months he says he carries around $4,000 in credit card debt. For a year after college, he lived at home with his parents to save money. He did not, in fact, save a penny—or move the needle very much on his student loans—even though he started earning close to $65,000 right out of school. “Every time I did something or bought something, I could justify it with, well, I can afford this because I’m not spending on rent like the rest of my buddies are,” he says. And so he’d put that cash toward drinks, good food, and golf trips instead. Then he moved out to his own place and started paying rent, but the drinks, good food, and vacations continued. “I just figured one day, you know, in the next year or two, I’ll get a job that’s much higher paying,” he says. “And then I’ll pay all this off.” So far, though, it hasn’t exactly happened that way.

Tyler’s buy-now-worry-later attitude—not to mention his inability so far to save for a down payment on a home or for retirement—is one he shares with many of his friends, and with many professional urban millennials throughout Boston. They’re transforming the city’s neighborhoods in countless ways, bringing a wave of swanky new apartments, bars, and businesses, but they are also a group that, media reports routinely shout, is perhaps collectively more in debt at their age than any other generation in history. According to a 2018 study by Northwestern Mutual, older millennials, between the ages of 25 and 34, have an average of $42,000 in combined debt—$4,000 more than the average American. Findings from the New York Federal Reserve, meanwhile, put the generational total at more than $1 trillion at the end of 2018, an increase of more than 22 percent over the past five years. One in five millennials with debt expects to die without paying it off.

The problem is compounded here in the capital of higher education, where 58 percent of the population is between the ages of 25 and 34, it’s exceptionally expensive to live, and student loan debt has doubled over the past decade: 60 percent of Boston students graduate with debt, at an average of more than $31,000, totaling $2.46 billion in 2018. If predictions come true and large numbers of students with loans across the country begin to default in the next four years, the economic ripple effects could be felt throughout the city.

But it’s not the burden of debt alone that’s contributing to the looming crisis; there may also be generational differences and new attitudes toward borrowing and saving at play. A good number of Boston millennials seem to be more comfortable with large amounts of college and credit card debt than previous generations, if only so that they can enjoy their lives now, rather than later. “I definitely have that mentality,” Tyler says, “like, yeah, I could die any day.”

Which is why even Boston millennials with well-paying jobs, and there are more and more of them these days, with unemployment at just 3 percent across the state, often find themselves treading water, perfectly capable of covering their rent, loans, and more than the occasional $17 cocktail—but seemingly unconcerned about the future (or at least unwilling to change their habits to account for it). “Society has imprinted this idea in our heads that you’ve got to do as many things as you can when you’re young,” says Tyler, who recently downloaded a budget-and-bill-tracker app called Truebill to figure out how he can afford a boating trip to the south of France, Portugal, and Monaco in the fall, and is now starting to stash a little cash away for the future. He says he’d like to buy property someday, but what’s the rush? He’s happy just keeping his head above water a little longer. As a friend once told him, “You don’t need to get ahead, because nobody else you know is getting ahead, either.”

It’s not the burden of debt alone that’s contributing to the looming crisis; there may also be generational differences and new attitudes toward borrowing and saving at play.

Take a look around Boston and it’s hard to deny: This is a young person’s town. The number of 20-to-34-year-olds here grew nearly 16 percent from 2000 to 2015, compared with 10 percent growth nationwide. Thirty-four percent of the state’s total college student population is in Boston, and roughly half of those students choose to live here after graduating. That’s because it’s a great place to work: Boston ranked sixth in a 2018 study of the country’s best cities to score a job, fueled by a growing supply of tech and biotech positions and the high concentration of recent graduates from schools like Harvard and MIT.

But those universities come with high price tags—for the 2019–2020 school year, it will cost $73,160 to attend MIT and $69,607 to attend Harvard. Boston College recently announced a 4 percent tuition increase from last year to $72,736 annually. “Compare Boston to, say, a city like Chicago, where a lot of people may have gone to a really great state school like the University of Michigan or the University of Illinois and graduate with less debt. In Boston, everybody went to Harvard, BC, MIT, Northeastern—places where students are going to rack up a lot of loans,” says Matthew Rutledge, an associate professor of economics at Boston College and a research fellow at the school’s Center for Retirement Research. “The city is swimming in student loan debt.”

For many, loan debt reaches levels so high that the numbers seem almost unrealistic, “like it’s just Monopoly money,” says Julie Miller, a research associate at the MIT AgeLab studying the impact of student loan debt and herself a millennial. Some 2.5 million U.S. graduates carry six-figure balances—including Kris, who graduated from Boston University’s College of Communication in 2018 owing more than $100,000. “I don’t feel like it’s a real number,” Kris explains. “It’s like when you were a kid and would send letters to Santa Claus. In theory, it’s going somewhere. You just don’t know where. That’s how I feel about paying my loans. Like, my debt is just a concept at this point.”

All of which is to say that while many millennials are able to take advantage of Boston’s soaring tech, biotech, and financial-services salaries, there are plenty who aren’t. “I had a breakdown about it the other week,” says Kris, who has been unable to land a journalism job and earns $14 an hour as the manager of a coffee shop in Brighton. “I wanted to take, like, four days off to myself, which really isn’t a vacation, just to take a step back and recharge, but I can’t afford that.” Recently, someone Kris knew got a salaried job complete with benefits and a retirement savings program. “And I’m like, ‘Man, what’s that like?’”

Photo illustration by C.J. Burton

For many millennials, quality of life right now is as important, if not more important, than quality of life later on. Which helps explain why, despite Boston being the fourth-most-expensive U.S. city in which to pay rent, some successful people under 35 are comfortable handing over a high percentage of their salary for the city’s increasing number of luxury options. Nearly half of all renters in Boston pay more than 30 percent of their income on housing. “I definitely shouldn’t pay as much as I do for rent, but I adjust elsewhere,” says Sarah, a 28-year-old who works in tech customer service and lives in the Seaport’s Watermark building. “But I come home from work and I’m just so happy. It’s like finding heaven. It’s so nice that the rent becomes a small aspect. It’s worth it.” She’s able to pay her credit card bill in full most of the time, but doesn’t stress about carrying a balance. “Never once in my life have I bought a trip or had an experience that I looked back on and said, ‘I wish I hadn’t done that,’” she says. “Never. Not once.”

Sarah and I meet at Tatte bakery on a sunny mid-May day with her friend Jess, who also lives at the Watermark. Since moving to the waterfront, they almost never leave the neighborhood except to go to work. (“I’ve lived in Boston for eight years,” Sarah says, “and I’ve been to Cambridge, like, three times in my life.”) At one time, they had six other friends living in the building. They may willingly overpay for housing, but they insist they save on other things. They work out in their building’s gym or for free on the public green, and hang out together on their roof after work. “We’re regulars at Strega, and my Ubers are never more than $10,” Sarah says. “The convenience definitely outweighs the rent.”

It’s an attitude that’s most definitely affecting the shape and feel of the city. With many others like Jess and Sarah moving in, Seaport developers who had originally banked on affluent older singles and empty-nesters filling their luxury high-rises are changing their approach to cater to an unexpectedly robust millennial population, with lower entry points and a retail mix that WS Development VP of leasing Todd Norley, whose company oversees the neighborhood’s retail development, says appeals to millennials and those with “a millennial mindset.”

Meanwhile, in Somerville, Mike and his fiancée, Brittany, are equally unfazed by debt or their lack of savings. The couple moved from Brighton to a $3,200 apartment with parking in the Montaje building in Assembly Row about a year ago, despite the fact that Brittany’s loans mean she’s often living paycheck to paycheck. Like most millennials, Mike justifies the cost without being asked: free gym, Trader Joe’s on site, easy commute to his office back in Brighton. “It’s definitely crazy to spend this much on rent,” he says. “But the convenience. And everyone we know has student debt and eventually, you assume, it will go away. It doesn’t really stress us out.”

For some, being consigned to what feels like a lifetime of debt has led them to feel oddly at ease with their situation. “I’ll never pay them off,” Talya, a 33-year-old school librarian, says of the $100,000 in loans she carries from two master’s degrees. “I think if someone were to say to me, ‘You actually have to pay these off,’ then I’d be like, ‘Okay, that’s impossible.’ I will just pay my monthly fee until I die. I assume with interest my loans will never actually go away.” She also didn’t think she had an alternative and says she would make the same decision again because “the result is a job that I really love, and I think would be harder to get without those master’s degrees.” Which is perhaps why her debt, though massive, is not exactly keeping her up at night. It just is what it is. She doesn’t know anyone without student loans. She is not a “crazy spender,” she says, but if there’s something she wants, or someplace she wants to go, she’ll usually be able to budget for it. “I actually feel pretty lucky,” she says.

Maybe she shouldn’t. Talya’s is the sort of story that Bob Giannino, the CEO of uAspire, a Boston-based national nonprofit that helps students and their families navigate the financial aid process, says gives him a bad feeling in the pit of his stomach. Thirty years ago, he took out student loans to help finance his own education, but it didn’t result in the kind of crippling debt that prevented him from saving or being able to eventually help fund his own son’s college education—which he says is not the case for today’s postgrads. “If someone with $100,000 worth of debt says they wouldn’t do it any differently, they don’t understand what it means to have $100,000 in debt,” he says. “There are almost always alternatives to borrowing that kind of money,” such as applying for grants, getting employer assistance, or choosing a less expensive program.

Student debt is pernicious no matter who you are, but tends to weigh even more heavily on people of color. A 2018 Brookings Institution report stated that black families carry more debt than white families and that black students, for example, are five times as likely to default on loans as both white graduates and white dropouts. That means saving for a home, children, or retirement is that much farther out of reach.

Giannino attributes much of the overall problem to understaffed high school guidance programs and overly complex lending options. “It’s a reality these days for most students to have to borrow some money to go to college,” he says. “But the process is really opaque.”

Meanwhile, some millennials’ attitudes toward spending aren’t helping matters, their consumerism encouraged by social media and what can be described as a generation-wide carpe diem philosophy. According to Schwab, half of millennials report that sites like Instagram and Facebook drive them to spend money they don’t have. “There are so many sayings you see on social media, like ‘I’m here for a good time, not a long time,’” says Marco, a 24-year-old Boston College graduate who is trying to slow down his spending after realizing he shelled out about $25,000 last year at bars and restaurants. “But I don’t work to not enjoy it. It’s like, I’m not supposed to enjoy my life until I’m 40?” Bridget, a 26-year-old publicist, agrees, saying, “If you want a nice bag, hell yeah, get yourself a nice bag. You’ve been working your ass off.”

Sounds great, but what about when the bill comes due? A recent report from the Federal Reserve Bank of New York found that 18-to-29-year-olds are finding it more difficult than previous generations to get rid of credit card debt. Twice already, Tyler’s had to cash in his 401(k) to pay off his credit card bill. “You see people doing these cool trips,” he says. “And nobody talks about how much money these trips are. So you put it on your credit card—you tell yourself you’re getting travel points—and then you go on the trip and the next thing you know, you’ve got to pay that credit card.”

“If someone with $100,000 worth of debt says they wouldn’t do it any differently, they don’t understand what it means to have $100,000 in debt.”

Millennials may be having fun now, but the party won’t last forever. The National Institute on Retirement Security says that two-thirds of the generation has nothing saved for retirement. For many, planning for the future has become a foreign concept. “I would say I live comfortably, and I have a nice apartment, I have a car, I travel, but [saving] is the one area where I feel like I’m being kind of debilitated by my debt,” says Samantha, a 26-year-old MBA student at UMass Boston with about $50,000 in student loans. “I think they say to have a six-month cushion or something, and I definitely don’t have that. I feel like all the money that I would put into savings is going toward my loan payment.” But also travel. She went to London and Paris in the fall and to China this summer. “I went to Hawaii a couple years ago, when I had my highest amount of credit card debt,” she says. “In this time of my life, I don’t want to be missing out on these opportunities to go to places.”

Perhaps Dharani, a 24-year-old Wellesley grad living in East Cambridge with some $40,000 in college debt and no plans to contribute to her 401(k), best embodies the millennial spirit when she asks: What’s the point in saving, really? “I’ve had a lot of conversations with my friends about how we would rather spend what little upfront money we have visiting each other, on travel, or on the kind of the stuff that’s more present-fun as opposed to investing in the 401(k) for later on down the line,” says Dharani, who expects to have her loans paid off by 2050 or so. “No one wants to be completely broke while investing for a future that seems so far away right now. The other option is just being completely miserable.”

But she and her cohort may be missing out on lots of other things. Debt is one reason millennials are buying homes and marrying at rates below those of Gen X and baby boomers and having fewer kids. According to the National Center for Health Statistics, the number of babies born in the U.S. fell for the fourth consecutive year in 2018 to a 32-year low—which, of course, will mean fewer workers coming up behind millennials to help fund the retirements they’re not prepared for. “In our research, we’ve found that the existence of a loan of any size is enough to weigh on people’s minds to say, ‘No, I’m not ready to save for retirement yet,’” Rutledge, the BC professor, says. “And so they don’t.” They may start in their forties or fifties instead, he predicts, which is “probably too late—and around the time they have to start paying for their kids’ student loans. People just sort of figure that they’re going to have to work forever,” and they very well might.

In lockstep, the city suffers, too. Most young people, of course, are neither able nor willing to pay for a corner unit in the Seaport, and already many who can’t afford city rents are decamping for more affordable housing in the suburbs—one reason Boston’s millennial population is starting to fall. In addition, cumulative default rates continue to rise: If anything close to the nightmare scenario the Brookings Institution predicts happens here in Boston, and nearly 40 percent of students with loans default by 2023, it could spell trouble for the higher education industry, one of the city economy’s strongest pillars.

None of that, though, seems to bother Bridget, the publicist. After work on a Thursday night in late spring, she is at the bar at Committee, a Greek hot spot in the Seaport that serves $16 glasses of obscure Mediterranean wines to good-looking twenty- and thirtysomethings. She’s a petite redhead, wearing a polka-dot top, delicate jewelry, and a millennial-pink denim jacket. She knows her way around Committee’s menu, and we order the sesame-crusted honey feta and a glass each of something white. Bridget loves to try new restaurants, even though she was a picky eater as a kid. “I love to eat, and I love to travel,” she says. “I love a big, fun dinner. I’m very comfortable with the idea of spending money on things that are a little bit more expensive, but not really materialistic.”

Bridget grew up in Westwood and graduated summa cum laude from Boston College. After a summer spent living on the Cape, she got a job working in consumer PR, repping brands such as Perrier and L.L. Bean, and has risen to the position of manager in less than five years. Her Instagram account is a mash-up of girls’ trips to the Bahamas, at the beach or on a boat, glasses of rosé in hand. She carries credit card debt, a number that rises and falls depending on how many friend events she has, though the more she spends on others, the more she’s tempted to spend on herself.

“You get to your twenties, and all of a sudden you’re shelling out money for weddings, bachelorette parties, bridal showers….” she says. “And I am the happiest human to be involved in all of these things. But you have a moment of like, Well, I can’t wait to go to the Bahamas with my friends, but this isn’t really a trip for me.” This year, she put more than $3,000 on her card to get certified as a yoga instructor, something just for her, even though “my first thought was, ‘I’m going to be paying this off for a little while,’” she says. And yet life is pretty good. She just booked an Italian holiday with three of her friends—a road trip through Umbria—and she manages to contribute to her company 401(k). “My roommate was joking with me because she passed her exams to becoming a physician’s assistant, and I was like, ‘Oh, great, we’ve got to go to dinner! Pick a spot,’” she says. “And she was like, ‘You’ll find any reason to celebrate!’ And I was like, yes. That’s a valuable investment to me. I could be dumping my money into a home that’s going to appreciate years from now and, what, sit alone in my house all day until then? That would not make me happy.”