This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Generation Debt: The Good, the Bad and the Ugly

by William Richards

NEW YORK ( MainStreet) --Indebtedness is a power relationship; one side has it, the other doesn't. A cynic will see the debtor as a serf tilling someone else's land. A naked capitalist, on the other hand, will see the debtor playing a supporting and necessary role the psycho-drama of our national economy.

Debt is a much more nuanced beast. As something so intrinsic to economics, it represents equal parts financial opportunity and millstone. And, that's why we distinguish between good and bad debt.

It has something to do with debt's cause--a small business loan (at 4-8%) is surely nobler than that a vacation to Key West expensed to your credit card (at a variable interest rate north of 19%). It also has to do with debt's intentions. Money-lenders are in business to lend you money, plain and simple, regardless of your best (or worst) judgment about how to spend and repay that money.

Student loans are the ultimate in good debt, at least historically. Your blue ribbon diploma should indicate, or so the lender believes, that you're going to be a productive, educated wage earner who pays down the principal. That's a good, economically supporting role to play, all things considered, because the promise of prosperity leaves you free to wrap yourself in other kinds of debt--good and bad--over the course of your life: home mortgage, credit cards, and then loans for your own children to attend college.

Student Loan Debt and the Diminishing Retirement Dream

If you're 20 years out of college, though, the underlying assumption that you'll play this supporting role is not as true as it once was--particularly if you're struggling to pay your student loans.

Student loan delinquency rates are up 50% since 2005, according to FICO Labs, and two-thirds of national student debt is owed by adults under the age of 40. Saddled with hundreds of dollars of student loan payments per month, Gen X- and Y-ers and Millennials do not fit the model of so-called productive wage earners--particularly if they can't free up capital for a down payment on a home or gain access to credit.
1 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $95.03 -2.90%
FB $116.73 7.20%
GOOG $691.02 -2.10%
TSLA $247.54 -1.60%
YHOO $36.58 -1.00%


Chart of I:DJI
DOW 17,830.76 -210.79 -1.17%
S&P 500 2,075.81 -19.34 -0.92%
NASDAQ 4,805.2910 -57.85 -1.19%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs