Debt has come to serve as a defining trait for millennials—about 60% don’t have enough savings to handle a $1,000 emergency bill—but a lack of education can make a tough financial situation even harder than it has to be.
Speaking at Fortune’s Brainstorm Finance conference in Montauk on Thursday, Hugh Frater, CEO of Fannie Mae, and Anand Cavale, head of consumer lending at SoFi, said one of the biggest money challenges among millennials is a lack of critical knowledge when it comes to things like home buying and paying off student debt.
Homeownership is up, and millennials are fueling that growth, Frater said, but they often come into the process with little knowledge on how exactly it works.
“One of the things we see is that there is inadequate consumer education around what it means to buy a home, what it means to get a mortgage. Completely inadequate,” Frater said. “One of the things that always astounds us is that more than 90% of homebuyer education is accessed after the buyer has an accepted offer.”
The same is true for student debt.
“People need to know they can refinance when the rate goes down and reduce their burden,” Cavale said. “Normally when interest goes down, they refinance their mortgages. It’s very well-known. But if somebody is carrying $80-, $90-, $100,000 worth of debt, and they don’t take the opportunity to refinance, which could save them $100s on a monthly basis, that’s a crime.”
As technology advances, it’s become easier to get a loan or mortgage, but Frater stresses that without crucial knowledge, consumers are still at a disadvantage.
“We can take those pain points out, but I think it’s still super important for people to know what they’re getting into,” he said. “Our job as a provider of liquidity is not to put people in the house of their dreams, it’s to put people in the house of their dreams that they can afford.”
More must-read stories from Fortune Brainstorm Finance:
—Brainstorm Finance 2019: Watch the livestream of the inaugural conference
—Andreessen Horowitz: How Facebook’s Libra cryptocurrency will be governed
—Welcome to the next generation of corporate phishing scams
—Western Union and Zelle dish on the competition and talk mobile payments
—Millennials are not basement-dwelling potheads, says Wealthfront CEO
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