13 The State of American Finances
- In 2015, 29 percent of teens considered community college, compared to 22 percent in 2014.
- In 2015, parents have saved an average of $10,040 for college.
- Parents expect their children to pay for one-third of their college expenses.
Credit card use among young adults has declined precipitously due largely in part to the CARD (Credit Accountability Responsibility & Disclosure) Act of 2009, which put restrictions on issuing credit cards to anyone under the age of 21.
Since the CARD Act’s implementation, college credit card agreements fell by roughly 60 percent between 2009-2013.
The problem is that today’s youth are more inclined to carry prepaid cards instead – which typically charge higher fees and offer few, if any, fringe benefits or opportunities to build credit history as a borrower.
Commentary & Conclusions
Although millennials are highly educated and entrepreneurial, the vast majority of young people have virtually no practical knowledge of how to manage household finances and budgets. Many teens use prepaid cards that prevent them from incurring debt, but also offer no benefits in terms of building credit or other rewards. In addition, they are faced with the costs of higher education that is exponentially increasing.
There is a powerful need for:
- 1 Possible solutions that would create affordable and more appropriate types of credit cards for young adults with built-in safeguards that help prevent unmanageable levels of debt;
- 2 Making financial literacy a top priority and incorporate it into every level of the public education system, and;
- 3 Provide more affordable higher education.