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Millennials with college degrees have reaped more benefits from the economic recovery than their less well-educated peers, and are overwhelmingly optimistic about their future prospects. But rather than splurging on a vacation or a new car, their top priorities include becoming debt-free and saving for retirement.

That’s according to an online poll of 902 U.S. residents ages 20 to 36 conducted by SurveyMonkey Audience on behalf of student loan marketplace Credible.com. The poll, taken Feb. 24-27, has a +/- 3.3 percent margin of error.

The Credible.com poll echoes findings of a monthly Conference Board survey, which shows the Consumer Confidence Index at a 15-year high. If jobs and wages continue to post gains, the Federal Reserve is widely expected to continue nudging interest rates up this year, with the next increase coming as soon as March 15. Rates on credit cards and variable-rate student loans are often tied to the prime rate or LIBOR, which track the Fed’s moves closely.

Millennials loaded down with student loan debt

One reason millennials don’t seem inclined to squander windfalls from a new job or raise may be that many are loaded down with debt.

Credible.com’s poll showed that the more education millennials have, the more likely they are to be employed full-time and to report that their personal finances have improved in the last 12 months. But they’re also more likely to be paying down student loan debt balances that exceed $20,000, $50,000, $100,000 or more, the survey showed.

By taking advantage of their improving circumstances to pay down debt like credit cards and student loans, millennials can put themselves in a better position to refinance their educational debt at lower interest rates.

Using a windfall like a new job or raise to pay down existing debt can reduce a borrower’s debt-to-income ratio and boost their credit score, making it easier for them to qualify for low rates from a growing number of lenders that offer student loan refinancing.

Credible.com founder and CEO Stephen Dash said the improving economy opens opportunities for millennials to put their personal finances on even firmer ground in the months and years ahead.

“Credible has helped thousands of borrowers find the right lender to refinance their student loan debt, putting many on the path to realizing long-term goals like becoming homeowners, starting their own business, or earning a graduate or professional degree,” Dash said.

Credible.com estimates that 8 million borrowers could qualify to refinance their loans at lower interest rates, with borrowers who refinance into loans with shorter repayment terms on track to save nearly $19,000, on average.

Improving financial picture for college grads

Millennials were more than twice as likely to say their personal finances had improved in the last 12 months than that they’d gotten worse. Nearly half of those surveyed (47 percent) said their finances had improved in the last 12 months, compared to 22 percent who said they’d gotten worse.

Those without college degrees were less likely to report that their finances had improved, and more likely to say they’d gotten worse. Among those with less than a high school education, for example, only 31 percent said their finances had improved in the last 12 months, and 37 percent said their personal finances had gotten worse — 20 percent said they’d gotten “a lot worse.”

Millennials are optimistic about the future

Among all millennials polled, 69 percent expected their personal finances to improve in the next 12 months, and only 9 percent predicted they’d get worse.

The proportion of millennials expecting their finances to improve was virtually the same regardless of whether they had a college degree or not — 68 percent of those with postsecondary degrees were optimistic, and 70 percent of those without degrees had a bright outlook.

But millennials without college degrees were the most optimistic that their finances will improve “a lot” in the months ahead — an outlook that could reflect support for President Donald Trump among less-educated voters, and belief in his promises to bring manufacturing jobs back to the U.S.

Among millennials with a high school degree or equivalent, 33 percent said they expect their personal finances to improve “a lot” in the next 12 months, compared to 15 percent of those with a bachelor’s degree.

4 in 10 with a college degree owe more than $20,000

Only one in three millennials reported having more than $20,000 in personal (non-mortgage) debt. But the more educated they were, the more debt they were likely to be paying back.

Among those with an associate, bachelor’s or graduate degree, 40 percent owed more than $20,000, and one in five owed more than $50,000. Millennials with graduate degrees were far more likely to have more than $100,000 in personal debt than any other group — 16 percent were in this situation, compared to between 1 and 3 percent for all other groups.

Student debt loan debt was clearly a driver of millennial’s personal debt levels, with 30 percent of millennials with college degrees reporting more than $20,000 in student loan debt.

Saving and paying down debt are top priorities

Asked how they’d spend any disposable income during the next 12 months, millennials ranked saving and investing as their top priority, followed by accelerating repayment of debt including credit cards and student loans. Both of those thrifty goals outranked taking a vacation or buying a car or home.

Millennials with college degrees tended to rank accelerating debt repayment and saving and investing as more important priorities than those without degrees, and were even less focused on buying a home or car in the near term than the group as a whole.

Lenders today are willing to provide student loan refinancing to a wide spectrum of borrowers — recent graduates are using Credible.com to refinance student loan balances that are nearly as big as their annual salaries.

But even borrowers who already qualify for refinancing can often get better rates if they’re able to boost their credit score by a few points. Credit utilization — how much of your available credit you are using — accounts for a good chunk of your FICO score.

For the long term, becoming debt free and saving for retirement were top goals across educational levels, with buying a home coming in a close third. Attending graduate school was a ranked as a more important goal than starting a business by respondents across most educational levels.

No degree? You’re twice as likely to be out of work

Three out of four millennials reported holding down full- or part-time jobs. While 81 percent of millennials with college degrees were employed, only 67 percent of those without post-secondary degrees were working. Those without college degrees were more likely to be working part-time, and nearly twice as likely to be unemployed and looking for work as degree-holders.

Full survey results

The results of each survey question are provided below. In addition to charts showing answers for all respondents, tables break down responses by college degree holders and non-degree holders.

Responses are further segmented for six levels of educational attainment: less than high school degree, high school degree or equivalent, some college but no degree, associate degree, bachelor’s degree, and graduate degree.

News media

Credible.com founder and CEO Stephen Dash is available to members of the news media for interviews, and can put reporters in touch with borrowers who have used Credible.com to find the right lender for their unique situation. Contact: press@credible.com.

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