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The Surprising Student Debt Problem of High Earning Millennials


About the author: Lamar Watson, CFP®, is a Fee-Only Financial Advisor in the Washington, D.C. area, that works with clients virtually across the country. Lamar's work with his clients focuses on budgeting, employee benefits, paying down debt, buying their first home, and investing. Lamar is the Founder of Dream Financial Planning, a virtual financial planning firm specifically designed to help young professionals and minorities take control of their finances and fulfill their dreams. Feel free to schedule a complimentary consultation to learn how we use the The DREAM Financial Planning Process ™  to help our clients achieve their goals.


Sixty-five percent of college seniors graduating from private or public college have accumulated student loan debt. Of that group, the debt averages out to around $29,200 per person.[1] And while student loan debt is a burden to any graduate, it can have a surprisingly negative effect on HENRYs, or those considered to be a high earner, not rich yet. Below we’re discussing why high earning millennials are feeling just as stressed, if not more, about their looming debt as their peers. 

Volunteering at JA Finance Park® Prince George’s County

Last Friday, I volunteered at the Junior Achievement Finance Park in Landover, MD. The program allows 8th graders from Prince George’s county to be adults for a day. Each student had an adult avatar with a different income, credit score, debt balance, job, and family. It was kind of entertaining for me to watch these kids stress out over not being able to afford the house, BMW, or pet they wanted because it didn’t fit into the budget.

Decisions like should I buy or rent a home, what type of groceries should I buy, and what kind of car can I afford. It was a fantastic program to be a part of, and I’m looking forward to going back next month. It’s nice to see financial literacy with real-world implications being taught at such a young age. You can learn about this fantastic program here

Financial Planning for Young Professionals

The stress these 8th graders felt trying to balance a budget is something most of the young professionals in the Washington DC metro area can relate to. When potential clients come to us, it’s because they have several priorities they’re trying to balance, and they want to make sure they’re making the right decision. 

The most common situation we face is a potential client coming to us with a six-figure income, high student debt, and the desire to buy a home while still managing to pay down student debt aggressively and save for retirement. We take all of our clients through The Dream Financial Planning Process to help them prioritize what’s most important to them and their families.

What should I do first?

1. If your company offers a 401k match, you should contribute at least enough to get the full match. Think about it; the employer match is free money.

2. We want to make sure our clients have a firm foundation before they purchase a home. At a minimum, we recommend those who are single to have six months of monthly expenses saved before they consider buying a home. If you’re married or living with a significant other and both are working, we'd like to see a minimum of three months’ worth of monthly expenses saved before purchasing a home.

3. Student Loans - If you have Federal student loans, you might qualify for one of the income-based repayment plans.

  • Pay as you Earn 
  • Income-Based Repayment
  • Income-Contingent Repayment.

If you’re unable to qualify for one of the repayment plans above, it might make sense to review opportunities to refinance your loan. If you have questions about any of these repayment plans, feel free to send us an e-mail.

Who Are HENRYs?

As mentioned above, HENRY stands for “high earner, not rich yet.” A common phrase in the world of finances, these are typically young professionals who are earning high incomes, but due to expenses or debt, they are not yet able to accumulate net worth. 

Student Debt Problems for HENRYs

Millennials across the board are faced with an immense amount of student loan debt. But for HENRYs, in particular, there are a few exceptional circumstances that can make the weight of their debt feel even heavier.

Debt Stress

Imagine loading up on extra classes, pulling frequent all-nighters, tackling residencies, and more to earn a degree and find yourself in a well-deserved high paying job. Now, imagine having to live paycheck to paycheck, even as you’re earning a much higher salary than others your age. That’s the reality many HENRYs who’ve accumulated student debt face. And because of this, they’re experiencing debt stress that their lower-income peers may not feel to the same extent. Debt stress is a real issue that can be physically experienced by those facing large amounts of debt. The anxiety felt by the weight of debt bearing down can manifest itself in many ways, including fear, panic, anger, and denial.[2]

Higher Taxes

The more money HENRYs make, the higher the tax bracket they end up in. And while student loan debt and interest can bring some relief to millennials, the more you earn - the less relief is given, in most cases. So, HENRYs are faced with both a more significant chunk of their paycheck going towards Uncle Sam while still being responsible for paying back student loan debt month after month.

No Time for Extra Income

These days, you may be hard-pressed to find a millennial who isn’t working on a side hustle. Whether it’s driving for a rideshare company, blogging for money, picking up a shift in retail or selling crafts online, lots of people pursue a second job to help offset their monthly spending and student debt. But when it comes to HENRYs, they’re often faced working long or odd hours their lower-income counterparts may not be experiencing. Especially if these HENRYs are entering into their first real job or they’re still lower on the corporate ladder, they could be expected to put in longer days than the typical 9 to 5. This leaves them with little time or energy to pursue a hobby or commit to a second job. 

With student loan debt standing at $1.48 trillion, a majority of today’s millennials are faced with how to pay down their portion while growing their savings and building net worth.[3] And for those who worked hard all through college to land a high paying job, student debt can be a crippling and unforeseen hindrance to their personal finances.   

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1.    https://ticas.org/our-work/student-debt/

2.    https://www.debt.org/advice/emotional-effects/

3.    https://www.newyorkfed.org/microeconomics/topics/student-debt

Do you have any additional questions about paying down your student loan debt? Feel free to reach out! 

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