The average millennial salary is $35,592 a year

While U.S. wages have seen a 67% increase since 1970, unfortunately, the growth hasn’t kept up with the rising cost of living. Rent, houses and college tuition have all increased faster than U.S. incomes, and millennials are struggling to make ends meet. Millennials’ annual salaries are an estimated 20% lower than the average salary for a baby boomer at the same age.

The average millennial has a net worth of $8,000

According to Business Insider, millennials are more financially worse off than any other previous generation. The net worth of individuals between 18 to 25 has plummeted by 34% since 1996, and most millennials have less than $8,000 to their name. Millennials have less wealth at their age than the generations before them.

The average millennial has less than $5,000 in savings

While a majority of millennials have a savings account, over half of millennials have a balance of less than $5,000. Considering nearly 45% of millennials have student loan debt, they are unable to set aside as much money as they’d like. According to one survey, if given $1,000, more millennials would prioritize using it to pay off debt over saving it.

The average millennial has staggering student loan debt

Since 1980, the cost of college in the U.S. has more than doubled. According to Student Loan Hero, student loan debt reached a staggering national total of $1.5 trillion in 2019. As a result, millennials are unable to save for emergencies, buying a house or having children as they prioritize living debt-free.

If you’re between the ages of 26 and 40, your financial situation may seem bleak. However, saving an emergency fund can help. Setting aside a small amount of money each paycheck and aiming for three to six months of living expenses is one of the most important steps you can take to get your finances in order.

Individuals have received temporary relief on unmanageable student loan debt during the COVID-19 outbreak, as federal student loans have been automatically placed in administrative forbearance, allowing borrowers to stop making their payments without penalties or interest accruing. That is scheduled to end on Sept. 30, 2020.

The move to make student loans dischargeable

It is estimated that 45 million Americans have student loan debt and owe collectively $1.6 trillion. Many financial experts say that en masse defaults on that mountain of debt is the next economic crisis waiting to happen. Lawmakers, including Massachusetts Sen. Elizabeth Warren, are pushing for changes to federal laws that will make it easier to discharge student loan debt through bankruptcy.

Most bankruptcy courts apply what is known as the Brunner test, which was established in 1987 to determine whether student debt can be discharged in bankruptcy. The Brunner test considers whether:

• A borrower is unable to maintain a “minimal standard of living” for himself and any dependents if forced to repay the loan
• There are extenuating circumstances that create a hardship and are likely to persist
• The borrower has made good faith attempts to repay the loan

A change in court attitudes?

There are signs that some courts are heading in that direction. Early this year, a U.S. bankruptcy judge in New York ruled that a 46-year-old man whose student loan debt had ballooned to more than $220,000 could discharge that debt in Chapter 7 bankruptcy.

In her ruling, Chief U.S. Bankruptcy Judge Cecelia Morris of the Southern District of New York explained that she was applying the Brunner test in the manner it was intended, not in the punitive manner that had been established by other courts.

There is no guarantee that courts nationwide will adopt the more lenient interpretation of the Brunner test. According to the Wall Street Journal, about 250,000 student loan borrowers file for bankruptcy each year and only about 400 seek to discharge their student debt. However, if more bankruptcy court judges fall in line with Judge Morris’ interpretation of the Brunner test, it could become an important transformation for those saddled with unmanageable student loan debt.