Why middle-class millennials take out big loans to travel the world

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Tonya Riley, a 24-year-old who works as a research assistant at a think tank in Washington, DC, would now be considered middle-class by most standards. But neither of her parents went to college, and she grew up with a single mother who lived below the poverty line. She excelled in high school and attended Brown University. But when she got there, she noticed that some of her peers had a distinct advantage: they could afford unpaid internships and summers abroad.

Riley decided to take out small student loans to cover the cost of these activities. “It’s kind of like ‘keeping in touch with the Joneses,'” she said. “Particularly when you’re in that atmosphere, you want to be able to have similar summer experiences…I wanted to do something that I thought was productive.”

So, with the help of financial aid and some student loans, she was able to keep up, completing two unpaid internships and a study abroad program in Russia. She also worked for her student newspaper, which she said was “time-consuming” and not lucrative work. When she graduated, she owed $11,000 in student loans that had helped cover costs, including housing and travel during her internships.

Riley’s problem was not unique. Young adults are sometimes criticized for frivolous spending on Instagram-worthy trips, extravagant bachelor parties and avocado toasts. But middle-class Americans transitioning from college to the workforce have a reason for some of these luxury purchases: They think all that experience will benefit them when they look for a job.

It depends a new study published in the peer-reviewed Journal of Consumer Research researchers from Bucknell University, Northwestern University and the University of Arizona, who studied how young middle-class adults act as consumers. “Emerging middle-class adults voraciously consume exploratory experiences in the present thinking about their imagined future selves,” he found. In other words, they spend money on expensive trips to gain more life experience and give them an edge in the job market, or so they don’t regret missing out on fun experiences. later, when they have more responsibilities.

It’s the new American dream

The new research also looked at why the middle class spends money on experiences rather than physical objects, said Jane Zavisca, one of the co-authors and associate dean of research and associate professor of sociology at the of Arizona. “This middle-class generation was brought up all their lives, even as children, to think of accumulating experiences as an investment in the future,” she said.

While they may be spending more than they can reasonably afford, it may actually pay off for them in the long run, Zavisca said. During a job interview, for example, a middle-class young adult who may have spent money on a study abroad program may make it a topic of discussion. “Both you and the person interviewing you can talk about those crazy trips you took while in college,” she said. “It’s a way to bond.” And being able to speak several languages ​​can also be a huge advantage.

This perk is only available to people who can afford it, however, and it allows people from wealthier families to enhance their job interview with casual conversation about expensive hobbies and similar tastes. in restaurants. Low-income young adults aren’t able to invest in experiences in the same way, Zavisca said. “If you can’t afford to take a gap year before college and go exploring, if you can’t afford to change cities to try another job, if you can’t afford to go eating at another restaurant three times a week, you don’t accumulate that store of cultural capital,” she said.

Recruiters are looking for more than skills, and also want to find a “cultural match” between candidates, their evaluators, and companies, Lauren Rivera, a professor at Northwestern’s Kellogg School of Management, found in her own research.

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Whether it’s international travel or charitable work at home, there can be benefits in terms of relationships and networking. But young working-class Americans may have fewer opportunities to meet adults who can help them, says Annette Lareau, a sociology professor at the University of Pennsylvania who studies inequality. “The dreams are there, but the resources are not.”

There are ways for poorer students to participate and make themselves “unique” in the eyes of employers and college admissions officers, Lareau said. They could volunteer to travel with a non-governmental organization or with a charity back home (which can also be a good way to network).

And of course, not everyone in the middle class can afford these experiences, as recent debt statistics show. Millennials have increasingly turned to loans and finance programs to finance expensive purchases, and household debt has been on the rise in recent years. American households are now more indebted than before the financial crisis, especially on student loans, car loans and credit cards.

The new Bucknell study could lead to criticism of internship programs, which can be difficult to navigate for low-income young adults, Zavisca said. (They are also less likely to have access to internships in the first place.) “These are things that employers and universities can do things about.”

Riley, meanwhile, isn’t sure taking the risk of doing unpaid internships and other “experiments” was really worth it. She might have gotten the same full-time positions after graduation without those internships, she said, but it’s hard to know. She is happy that the total amount she had to spend out of pocket, the $11,000 in loans, was relatively small compared to the total some of her peers had to pay for their education and internships. “For me, it was important to have the college experience and to focus on a social life and on studying,” she said. “I was able to make things work.”

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