What are the Biggest Financial Obstacles Faced By Young People?

Updated August 2026

Traditionally, the hope is that each generation will do better than their parents before them. Unfortunately, for young people today, it may be difficult to achieve a standard of living that is as good as the one enjoyed by our parents. There are many reasons why it is more challenging to be young today than it was just a few decades ago, and many reasons why so many young people today find themselves back at home with their parents after graduating from college or living with their parents for so much longer than in the past.

Financial Obstacles of Today

Some of the key financial obstacles that are causing problems for young people today include the following:

• Student loans. In our parent’s generation, colleges were not nearly as expensive and it was possible to get a good education at a state college and to graduate with no debt or almost no debt. Today, the average student graduates with tens of thousands in loans- and that is just from going to college. Those who attend law school or medical school may have $100,000 of loans or more! Starting life with this loan burden is a huge disadvantage.
• Health care. Insurance today is prohibitively expensive and fewer employers are offering it. Those without employer-sponsored insurance or those with no jobs (and thus no insurance) may find themselves paying hundreds of dollars a month for a basic insurance policy for a single person, while young families have it even worse. Not having insurance, though, is a recipe for disaster because a single accident or illness can bankrupt you. While ObamaCare seems to present hope for change, many experts suggest that ObamaCare may make the cost of insurance even more expensive than it is now- and you’ll pay a penalty if you opt not to have it.
• Later marriages. While this can have some financial advantages (delaying children and the expenses that go along with them), it also has disadvantages as well. Two people who pool their incomes can live almost as inexpensively as one person, meaning that there is more money left over for other goals such as saving for a house or saving for the future.
• A problematic housing market. Although mortgage rates are at record lows, the housing market is and has been in a mess for a long time. People who bought houses during the height of the mortgage mess may be facing foreclosure or may be underwater on their mortgage. Those who want to buy a house today to take advantage of the low mortgage rates may not have the down payment to do it (because of student loans and later marriages) and/or may not qualify in a tighter credit market.
• More debt targeted at the young. Today, credit card companies push college students to get credit cards and to run up debt. As a result, students graduate not just with student loan debt but also with credit card debt. This is a burden that can make it even harder to get ahead.
• High unemployment rates. With a tough job market, many young people are having a hard time finding jobs in their field. This leaves people with the tough choice between taking some job just to have a job, or waiting it out living at home and trying to find work within their field.

The Student Loan Debt Crisis

Student loan debt has become the defining financial handicap for Millennials. The Institute for College Access & Success reports that two-thirds of the class of 2012 graduated with debt, and the average balance was $29,400. That figure alone is staggering, but it masks the extreme cases: law school graduates routinely cross the $100,000 threshold, and medical school debt can exceed $160,000, according to the Association of American Medical Colleges.

This debt load changes life trajectories. A Federal Reserve Bank of New York analysis shows that high student loan balances correlate with delayed homeownership, reduced entrepreneurship, and postponed marriage. The Consumer Financial Protection Bureau advises borrowers to verify enrollment status with their loan servicers and school, because reporting errors can trigger premature repayment demands or loss of grace periods. Getting that information right is a basic step many overlook. The Federal Student Aid office also stresses that students selected for FAFSA verification must provide documentation to confirm application details and correct mistakes before aid is disbursed; missing that step can delay or reduce the very aid meant to keep borrowing in check.

For those already in repayment, the National Student Loan Data System (NSLDS) gives borrowers a way to view their federal loan and grant history, including enrollment status, so they can spot and correct inaccuracies. Young people who ignore these tools risk having their loan servicer place them in the wrong repayment plan, and that can balloon interest costs over time.

Healthcare Costs and the Insurance Gap

Health insurance is a second heavy weight. The Kaiser Family Foundation found that employer-sponsored family premiums rose 50% between 2003 and 2012, while the share of firms offering coverage slid. Young adults, especially those in entry-level or part-time work, are the most likely to be uninsured. The U.S. Census Bureau reported that 27.7% of 18- to 34-year-olds lacked health insurance in 2012.

A single accident or illness can wipe out years of savings. Even with the Affordable Care Act’s dependent coverage provision (allowing young adults to stay on a parent’s plan until age 26), many still fall through the cracks. Those who buy their own plan on the individual market may face premiums of $200 to $300 per month for a basic policy, and deductibles are often high enough to discourage routine care. The CFPB has flagged medical debt as the leading cause of collections activity on credit reports, a blow that can depress a FICO Score by 100 points or more and lock young people out of affordable credit for years.

Later Marriages, Lost Financial Synergy

Marriage is happening later than it did for previous generations, and the delay has a real financial cost. The U.S. Census Bureau puts the median age at first marriage in 2012 at 29 for men and 27 for women, up from 23 and 20 in 1960. Two people sharing a single household can split rent, utilities, and groceries, which often reduces per-person living costs by 30% or more. That pooled income can then be directed toward a down payment, retirement savings, or an emergency fund.

Delaying marriage isn’t solely a financial choice, of course. Many young people cite educational and career goals, or the desire to be financially stable before teaming up. But the tradeoff is real: years of solo living while carrying student loans and credit card debt make it harder to build a nest egg. The Federal Reserve’s Survey of Consumer Finances for 2012 shows that the median net worth of a household headed by someone under 35 was only about $10,400, and a big chunk of that was in retirement accounts rather than liquid savings.

For instance, if two people each earned $2,500 a month and lived alone, their combined rent (assuming $1,500 per person) and utilities would total $3,000 monthly. If they married and shared a home with $1,500 rent and $400 utilities, their total monthly housing cost would drop to $1,900. That $1,100 monthly savings could be redirected toward savings or debt repayment, over a year, that’s $13,200 in potential financial flexibility.

The Housing Market Mess

Mortgage rates are at historic lows, but that doesn’t help if you can’t get a loan. Lenders, burned by the foreclosure crisis, have tightened standards dramatically. The National Association of Realtors reported that the average FICO Score for a conventional purchase mortgage rose to 750 in 2012, far above the pre-crisis norm. For a young person with a thin credit file, a few years of student loan repayment, and a high debt-to-income ratio (DTI), hitting that threshold is a tall order.

The down payment is another barrier. The Federal Reserve’s 2012 Survey of Consumer Finances found that 68% of renters under 35 cited lack of a down payment as the primary reason they hadn’t bought. With median home prices still high in many markets even after the crash, a 20% down payment can easily exceed $40,000. That’s money young people simply don’t have when they’re paying off student loans and credit card debt. The FDIC has noted that the post-crisis regulatory environment, while safer, inadvertently made it harder for first-time buyers with modest savings to enter the market.

For example, if you have a 620 score and need about $8,000 for a down payment on a $200,000 home, you’re likely to be rejected by most lenders. A score below 640 often disqualifies borrowers from conventional loans, and without a co-signer or significant savings, your options are limited to high-cost FHA loans or waiting years to improve your credit and save more. This isn’t just a hurdle, it’s a systemic barrier for those without family wealth or access to financial support.

Credit Card Debt Tailored to the Young

Credit card issuers have long marketed aggressively to college students. Sallie Mae’s 2012 national study found that college students carried an average credit card balance of $3,173, and 40% reported charging purchases they knew they couldn’t pay off right away. Chase, Discover, and other major issuers have campus marketing programs that offer free merchandise for signing up, and the CFPB has documented that many students don’t fully understand the interest rate they’re agreeing to. With typical APRs above 18%, a $3,000 balance can cost more than $500 a year in interest alone.

That debt hangs around. The Federal Reserve Bank of New York’s Consumer Credit Panel shows that delinquency rates on credit card debt are higher for borrowers under 30 than for any other age group. A single missed payment can send a FICO Score tumbling, making it harder to get an apartment, a car loan, or even a job, since some employers check credit reports.

Consider this: a student with a $3,173 balance at 18% APR will pay $571 in interest over one year if they only make minimum payments. That’s more than the average monthly rent in many cities. Paying down this debt aggressively, say, $200 per month, would cut the payoff time from over 17 years to under 2 years, saving over $1,000 in interest. The choice isn’t just about avoiding debt, it’s about reclaiming income that could otherwise go to interest.

High Unemployment and Its Long Shadow

Labor market weakness hits young people hardest. The Bureau of Labor Statistics reported that the unemployment rate for 20- to 24-year-olds was 12.5% in September 2012, more than double the overall rate of 7.8%. The situation is even worse for those without a college degree, but many graduates are also underemployed, working in jobs that don’t require a bachelor’s degree. The Economic Policy Institute found that the underemployment rate for young college graduates was 18.3% in 2012.

The scarring effect is real. A Federal Reserve study found that workers who enter the labor market during a recession earn less for a decade or more compared to those who graduate in better times. For a generation already carrying heavy debt loads, that earnings gap can delay every financial goal: marriage, homeownership, retirement saving, and even starting a family.

The Retirement Savings Gap

Pensions are vanishing. The Bureau of Labor Statistics reports that in 2012, only 18% of private-sector workers had access to a defined-benefit pension, down from 38% in 1990. Instead, young workers are largely on their own with 401(k)-type plans. The Federal Reserve’s 2012 Survey of Consumer Finances revealed that only 41% of families headed by someone under 35 had any retirement account, and the median balance was just $13,000.

Social Security’s uncertain future makes saving even more urgent. The Social Security Administration’s 2012 Trustees Report projected that the trust fund would be exhausted by 2033, after which benefits would need to be cut by about 25%. Young people today may well face reduced benefits just as they retire, meaning that personal savings must fill a larger gap.

The Social Safety Net Under Strain

Beyond specific obstacles, there’s a broader anxiety about the safety net. The Center on Budget and Policy Priorities has documented that state funding for public colleges has been slashed over the past decade, a shift that directly pushes costs onto students. The CFPB has also flagged the lack of strong consumer protections in the student loan market compared to mortgages or credit cards. While the FDIC insured bank deposits protect savings, there is no equivalent safety net for the rising cost of education or healthcare.

Young people are navigating a financial landscape that is more complex and less forgiving than the one their parents knew. The Pew Research Center found that 36% of 18- to 31-year-olds lived with their parents in 2012, a share not seen since the 1960s. That living arrangement is often a survival strategy, not a preference. It buys time to service debt, build savings, or search for a career-path job, but it also delays the independence that previous generations took as a given.

For instance, if you have a 620 FICO score and need about $8,000 for a down payment on a $200,000 home, you’re likely to be rejected by most lenders. A score below 640 often disqualifies borrowers from conventional loans, and without a co-signer or significant savings, your options are limited to high-cost FHA loans or waiting years to improve your credit and save more. This isn’t just a hurdle, it’s a systemic barrier for those without family wealth or access to financial support. Those who lack a stable income, a co-signer, or a family savings pool may find homeownership out of reach entirely.

Frequently Asked Questions

What is the average student loan debt for young people in 2012?

The average bachelor’s degree recipient in 2012 graduated with about $29,400 in student loans, according to The Institute for College Access & Success. Graduate and professional degree holders often owe far more, with law school graduates frequently exceeding $100,000 and medical school graduates topping $160,000.

How does living at home affect financial independence?

Living with parents reduces immediate expenses, but it can also delay the development of independent credit histories and savings habits. The Pew Research Center notes that 36% of young adults lived at home in 2012, often as a direct response to debt and job market weakness.

Why are healthcare costs a burden for young adults?

Young adults are the most likely to be uninsured. Census data shows 27.7% of 18- to 34-year-olds lacked coverage in 2012. Even with insurance, premiums and deductibles strain budgets that are already stretched by student loan payments and lower starting wages.

How does delayed marriage affect finances?

Marrying later means more years of single-income living expenses, which can consume a larger share of take-home pay. Pooling incomes through marriage can cut per-person housing and utility costs significantly, freeing up cash for savings goals. The U.S. Census Bureau reports the median marriage age has risen to 29 for men and 27 for women.

What are the challenges of buying a home in the current housing market?

Tight credit standards and high down payment requirements are the main obstacles. The National Association of Realtors notes that the average FICO score for a conventional loan was 750 in 2012, and a 20% down payment can easily exceed $40,000. Student loan debt inflates debt-to-income ratios, making qualification harder.

How can young people manage credit card debt?

The first step is to stop adding new charges and pay more than the minimum each month. CFPB resources emphasize that paying down the highest-APR card first saves the most money, and avoiding late payments protects the FICO Score. Students should also be wary of on-campus credit card marketing offers.

What is the unemployment rate for young adults in 2012?

The Bureau of Labor Statistics reported a 12.5% unemployment rate for 20- to 24-year-olds in September 2012, more than double the overall rate. Underemployment, which includes part-time workers who want full-time work, pushes the effective rate for young graduates to about 18%.

How does the uncertain future of Social Security affect young people?

The Social Security Administration’s 2012 Trustees Report projected that the trust fund would be depleted by 2033, after which benefits could be cut by about 25%. Young workers today may need to rely far more on personal savings to maintain their standard of living in retirement.

What steps can young people take to overcome these obstacles?

Building an emergency fund, tracking spending, and creating a debt reduction plan are foundational. The CFPB and FDIC offer free financial education tools. For student loans, income-driven repayment plans can make monthly payments manageable, and using the NSLDS to verify loan records helps avoid costly errors.

Are there any advantages to facing these financial obstacles early?

Yes. Navigating a tough economy forces young people to learn budgeting, credit management, and long-term planning skills that many older adults never had to develop. Those who get a handle on debt early and start saving, even small amounts, can build a stronger financial foundation over time. The Federal Reserve’s data shows that wealth accumulation accelerates after age 35 for those who start early, so the payoff is real.

These are some of the biggest issues that face the young today. These problems, coupled with the uncertain future of social security and the fact that so few employers offer pensions (or the guarantee of long-term employment over the course of a career) have created a situation where the financial future of the young is very uncertain.