The millennial generation is struggling with high debt levels.
According to a new study by Hoyes Michalos & Associates Inc., two in five insolvency filings in Ontario now come from millennials, defined as people born between 1981 and 1996. And the main debts burdening the generation are student loans and credit cards, according to the report.
"Millennials are a generation buried in student loans which is why we are seeing such a dramatic rise in student debt driven insolvencies," said the report. "In our 2018 study, almost one in five (18%) insolvencies involved student debt with 64% of student debt insolvencies filed by millennials, followed by Generation X at 31%."
The average amount owed in student debt was $14,311 in 2018, said the report. Compounding problems, millennials also owe an average of $11,716 in credit card debt. The report is based on 4,200 personal insolvency filings in Ontario during 2018 and found that much of the credit card debt is acquired on everyday purchases rather than big-ticket items.
"Millennials don’t limit their credit card use to big-ticket items," states the report. "They are highly likely to pay for everyday goods and services, including entertainment, groceries, and clothes, as well as make online purchases with credit cards, which can lead to financial problems when credit is used to balance their budget, with minimum payments viewed as just another monthly expense to be covered."
The report concluded that a dwindling number of millennial homeowners leaves fewer and fewer of those who are in debt with an escape plan. Just 3% of all millennial debtors owned a home at the time of their insolvency filing.
