The young and the penniless

Anya Kamenetz interviewed more than 100 young adults for her book, “Generation Debt: Why Now is a Terrible Time to Be Young.”

Each offered tales of financial distress. Thirty-year-olds described moving back in with their parents because they couldn’t afford apartments on “crap job” wages. Some had declared bankruptcy on credit card debt. Others had achieved their dreams of graduating from college, but faced payments on $20,000 to $40,000 worth of student loans. They felt “screwed by the economics of daily life,” according to Kamenetz, a 25-year-old writer who lives in Manhattan.

Kamenetz has appeared on Fox News and MSNBC since “Generation Debt” was published in February.

“The authors’ insistence that they’ve struggled more than any previous generation may annoy you,” warns BusinessWeek, which recently reviewed “Generation Debt” along with “Strapped,” a similar book by Tamara Draut.

A Wall Street Journal reviewer questioned if a 27-year-old vegan caterer profiled in “Generation Debt” is really worthy of sympathy. The young woman racked up $45,000 in students loans earning a degree in English and women studies, and now has trouble making monthly payments on the loan.

Either way, the book offers insights into young adults, their finances and their expectations.

Kamenetz will give a free talk at 7 tonight at North Idaho College’s Schuler Auditorium. Her visit to Coeur d’Alene is sponsored by Kootenai County Taskforce for Financial Literacy.

“Part of what I work on is to get people to change their stereotypes of young people,” Kamenetz told an economics class at Coeur d’Alene High School. Hip in black converse tennis shoes and a low-cut T-shirt, Kamenetz quizzed students about their credit cards payments, and asked them how they planned to pay for college.

In “Generation Debt,” Kamenetz credits economic forces, not generational laziness, for young peoples’ slow ascent into financial maturity.

She graduated from Yale with a literature degree in 2002. Just a few years earlier, college students were cashing in on the dot.com boom, landing lucrative jobs straight out of school, Kamenetz said. She and her classmates felt ripped off by the changing economy. They graduated into an economy of jobs without the benefits their parents enjoyed, she said, and faced looming student loans.

“Generation Debt” ties the rising cost of higher education to many young adults’ financial difficulties. The average college student graduates with $20,000 in student loans, and $3,000 in credit card debt – figures that have skyrocketed since the early 1990s, Kamenetz said.

Most college students aren’t savvy enough to compute their expected income after graduation and compare it to their future loan payments, she said. The loans seem like free money at the time, and students use it to move out on their own, make car payments and splurge on spring break trips.

“That debt is going to stick around,” Kamenetz said. “You have to be able to figure out how to pay for it.”

Her book tells the story of a young man who skipped payments on a $38,000 student loan for two years. By the time the penalties caught up with him, he owed over $100,000.

“He can’t buy a house,” Kamenetz said. “His family members get calls from collection agencies.”

But how do you afford college, especially if your parents can’t help you with tuition, asked Brooke Hayden, a Coeur d’Alene High School junior.

Loans are OK, if they’re used judiciously, Kamenetz said. But “if you need to use student loans to make car payments, you probably can’t afford the car,” she said.

Kamenetz also cautioned students to be careful with credit cards, noting that a $10 pizza can turn into a $22 purchase if hefty interest fees accrue.

Students should also be thinking about retirement, she said. Last year, Kamenetz earned $37,000 from her work as a freelance writer, and tucked $3,000 away for retirement in a Roth IRA. With fewer jobs supplying pensions, young adults need to start saving early, she said.

After an hour of preaching thrift and financial restraint to the class, Kamenetz made a confession: She’s got her eye on a $600 pair of Prada jeans.

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