Young Architects and Our Journey Through Debt
One of the topics that I’ve been passionate about for the past five years is the debt that a majority of graduates from college carry in the 21st century. As most young architects would probably agree, I graduated with a Masters of Architecture degree with a substantial amount of debt. To put it in perspective, the amount of money that I took out for my education was enough to buy a brand new Tesla Model 3, a fixer upper house in Buffalo, NY, a comfortable trip around the world, or anything else worth $50,000. Even with this in mind, there’s an implicit bias in the workplace where employers and people of older generations assume that young architects (i.e. millennials as of 2018) have money management issues.
Now, that’s not to say that some young professionals don’t have money management issues, but there’s something that everyone should understand about the new generations entering the workforce.
Think of everyone’s net worth in the world as being in a race where everyone is lined up by how much their worth. Those who have $0 start at the middle of this line. As a person’s worth increases, they move further up the line. As the person’s worth decreases, they move further behind the line. This race is a metaphor for the career and lives of the people; success is represented by those who are able to get further ahead of the line.
Let’s imagine that this lineup starts when a person is considered an adult at the age of 18 in the United States of America. At this turning point in one’s life, a decision has to be made to either attend a college and pursue a higher education, begin a trade school, or find a job. The path that has become a standard one for young adults to follow is the former where they spend the next 4+ years of their lives trying to determine what field to pursue and whether they’ll need to finance their education by taking out loans.
Those who are unable to afford an education, but wish to follow the path of higher education now have to move further behind the start line of the race. As they invest more time into their education, they are also investing more money. In essence, the people who choose to pursue a higher education without the financial means to do so are forced to run backwards in this financial race while everyone else is moving forward.
Ultimately, the financial gap between those who were fortunate to pursue a higher education without taking out any loans and those whose family’s were unable to afford their education is growing wider. In fact, people who started their pursuit of a higher education during the recession in 2008 and took out government student loans are now facing a 6.75% interest rate on an average of $30,000 to $35,000 for a bachelor’s degree. Let’s not even get into those less fortunate people who didn’t qualify for government student loans and had to take private loans with 10% interest rates and up.
We all know who these people are and if you’re a millennial like me who graduated from college and are now 0 to 5 years into our careers with student loans, you probably feel like you’re financially behind everyone else because we’re starting this race further behind the generations before us. The generations before us were able to get through a higher education with $10,000 to $15,000 of student loans in the 90’s. The younger generation today needs to work harder to get to the the same starting point that the generations before them were at when they began their careers. Yet, we’re constantly being told that we’re an entitled generation and that the world is our oyster.
Let me share my position as an average millennial for the remainder of this post in hopes of affirming the lifestyle and emotions you’re currently going through as a millennial and/or enlightening people who don’t understand why the younger generations seemingly ask for more finances, opportunities, and career growth.
After I graduated from architecture school with a Bachelors of Science degree and Masters degree, my government loans totaled a staggering $50,000 with an interest rate of 6.75%. This means that every year I’d be paying approximately $3,375 in interest, not to mention there was also the interest that already accumulated during my time studying in school and living off of rice and canned beans. If we add the $282 per month for interest rates to my actual payments towards the principal amount, we’re at about $500 a month minimum to pay these student loans off in a 10 to 15 year timeframe.
Now let’s consider all of the necessities for living such as housing, food, and other bills that we have to pay when we’re working professionals. Rather than going through all of the nuances of these things, my cost of living averaged about $1,600 a month with the larger expenses being rent, utilities, car payments, insurance, and so on. Add this amount to my student loan payments and we’re at $2,100 a month at a minimum just to squeeze by with as little as necessary to live. In one year, that totals $25,200.
As a new graduate, I was fortunate to start my career off immediately with an architecture internship that paid $33,000 a year. You’re probably wondering, a new graduate with a Masters of Architecture degree is only paid this much? Although it’s dependent on location and other factors, this is not as far fetched as you would imagine. This was in 2013 which is right around the time of recovery from the 2008 financial crises and it wasn’t located in a major city with a high cost of living. In fact, this is also true of other professions where we’re influenced to believe that the amount of pay is much higher than it is in the real world with the exception of the technology industry.
To make a long story short, after taxes, I was left with about $28,500. If we subtract my cost of living of $25,200, I was left with $3,300 to use for eating out at restaurants a handful of times, saving for a “rainy day”, and to pay for unexpected items such as car servicing and the unfortunate passing of my father. Putting this in perspective, $3,300 is about $275 a month and this was the amount of money that I had to spend on things outside of the bare necessities of living.
Statistically speaking, this story is true to a majority of the younger generations graduating from college in the 21st century. To clarify the myth in the eyes of the older generation that student loans carried by the younger generations should have no influence on our income across America, here is a reason based on statistics that should put it in perspective.
Analyzing the average amount of debt that people graduated with in the 1990’s in relation to the median income at that time, a majority of people had $12,000 of debt and careers that paid $42,000. During the 1990’s, the cost of living and average price of products were also much lower than they are in the 21st century. This was the time when a pack of bubble gum could be purchased for 25 cents whereas they cost between $1.50 to $2.50 and up in 2018.
Looking at statistics from 2015, people were graduating with an average of $32,000 and had an average income of $43,000. If we imagine these numbers in relation to the average cost of living in 2015, we start to get a clearer picture of the issues that the younger generations are facing today. We’re constantly being asked to perform at higher levels in our careers with the hopes of earning a little bit more so that we can afford the bare necessities for living, save up to buy our first house, afford a wedding worth having, and so on. Unfortunately, our efforts are usually rewarded with more work and responsibility without the additional pay like the previous generations. This is one reason why the younger generation tends to migrate from one company to another in a short amount of time.
Let’s be clear, many of us younger generation people want to travel the world and experience the things that are being shared all over social media. These dreams are driven, not by wanderlust and laziness, but by the fact that the older generations were able to afford these trips across the United States of America, fly across the world, and be able to come back to a home that they owned, be greeted by their wonderful family and pets, and live their lives knowing that they can afford to pay for tomorrow’s unexpected problems. Most importantly, it’s driven by the idea of escapism where we, the younger generation, want to pretend to have a life where our net worth is not negative six figures. Many of my colleagues who have over six figures in student debt alone have resigned to die in debt.
Fortunately, I’ve been able to pay off my student debt over a period of five years. It took a lot of sacrifices, dedication, and focus to reach this point, but it was worth clearing the thought of living in debt for the rest of my life. During this time, I worked late into the evenings on a salaried position with no additional pay beyond my standard 40 hour weeks. I didn’t do this because I was asked to, I did it because I was eager and excited to continue learning and to progress every project as far forward as possible.
The younger generation is one of the hardest working generations out there and we are constantly faced with issues that we disguise in hopes of attaining the dreams that our parents, extended family, mentors, professors, and so on, have sold us throughout our lives: work as hard as you can, be all that you can be, and you will find success. As a business owner, one should make the effort to recognize the young professional working their hardest, staying late into the evening, brings exceptional value to the company, and promote that individual to a position where they can succeed. The younger generations are known for being team players in the whole sense of the word. Perhaps it’s time we come together and fight to be paid what we’re worth and for the value that we bring to our employers.
After living under this mantra that the financial success that was dictated to us by the people we trust the most, please, don’t turnaround now and tell us that true success is whatever we define it to be. Because of the student debt we’ve accrued, because of rising education costs, and the college dream sold to us by our parents, the economy where 1% of the population owns more wealth than the bottom 97%, and the culture that has defined an entire generation as lazy and entitled; success has come to mean not being homeless, working in the field we studied, and dreaming of paying off debt. Success used to be defined as a single person who either graduated or dropped out of high school being able to buy a house, a car, and care for their family. How do we get back to that and make sure that success can be a financial reality for all?
What are your thoughts on success? How can we ensure that success is in the reach of everyone? How can we change the perceptions that older generations have on younger generations? What are your thoughts on the generational gaps in a work environment? How are you dealing with or observing those with debt in your workplace? Leave a comment below with your thoughts.