The Indentured Generation

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"We're just making it harder and harder to be a young person and to start getting ahead," says Hans Riemer, former director of the youth and economics think tank the 2030 Center and now political and issues director of Rock the Vote. Real wages for young people ages 25 to 34 declined 15 percent from 1979 through 1996, according to a 1998 Department of Labor study.

Add to this mix the increase in credit card debt and you have the makings of a real problem. Credit cards are nearly universal among college students and young adults today. Are the cards financing frivolous consumption or covering living expenses? According to Marie O'Malley, vice president of marketing for Nellie Mae, 27 percent of those surveyed used credit cards for part of their college expenses. "That's just an indication that we may have a population that's comfortable with credit," she says, "but may not be making the smartest decisions about how to finance if they don't have cash on hand for college education."

It could also indicate that even record-high student loans are not enough to cover soaring college costs. Federal loans are capped at $5,500 per year for students' junior and senior years at a time when some universities charge as much as $36,000 per year. Indeed, students who graduate with the highest levels of credit card debt also have the highest levels of loan debt and are more likely to have attended expensive four-year colleges and be from low-income families. This suggests that they're either using their credit cards to supplement their loans for educational expenses or for the higher level of personal expenditures that are the norm at institutions geared toward the wealthy.

Borrowers often find that, rather than becoming more manageable over time, their debt increasingly becomes a problem as they age, says Kevin Williams of the Consumer Credit Counseling Service in Fort Worth, Texas. "Generally we get people who have gotten into debt in college, but they don't come into our offices until they've graduated and started families," he says. Most of the group's clients are 28 to 35 years old, and keeping them out of bankruptcy has become a big challenge. Student loans come into the picture "once they've graduated and reality hits, and they don't get the job paying the amount they had hoped, and then the problems arise when you add credit card debt and rent and car payments."

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