WASHINGTON (MarketWatch) — Yes, the student-loan burden is hurting millennials. But talk of a “lost generation” is overblown.

At least that’s the view expressed in a new Merrill Lynch note on the matter, from the work of their equities, economics and securitized products teams from six authors.

They argue that the problems hitting those born between 1981 and 1996 are cyclical, not structural. They note that the percentage of students who borrow has climbed only modestly — to 68% from 60% in 2000; aggregate debt-to-income for households headed by under 35-year-olds has actually declined; and the college wage premium has increased.

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Looking at the Fed’s survey of consumer finances and a Brookings Institution paper, they find that the median education debt for under-35s is $17,200, compared to $29,900 as a mean average, meaning that outliers are skewing the numbers. Only 6% have debt of over $100,000, they add.

“The vast majority of students are graduating with a historically manageable level of debt,” the analysts say.

Those with student loans have deleveraged elsewhere, by taking out less in mortgages, credit cards and car loans. The analysts speculate that’s both by choice and by necessity, as lenders have tightened standards.

They also point out that, even in a weak economy, the share of this age group investing in retirement accounts has remained steady, at 39.3% in 2013 from 42.1% in 2007. “This is an encouraging sign, showing a more responsible youth population,” the analysts say.

They also don’t find anything to suggest changing preferences. “The good news is that we do not see evidence that there has been a permanent shift in preferences among this cohort. Time will heal the wounds; this is not a lost generation,” the analysts say.