For many Americans student loans have a deeper effect outside of just cutting into a monthly budget. Many Americans are pausing major milestones due to the amount of debt they’ve accumulated.
Authored by Lisa Davis, a new survey from personal finance marketplace site Credible shows that student debt is influencing major life decisions for millions of adults with degrees. The survey included 1,006 U.S. adults from all 50 states and Washington, D.C., whose education ranges from technical and community college degrees to doctorates.
According to the findings, a solid 44% of respondents who hold or previously held student loans said their debt forced them to delay a major life milestone. That’s nearing half of respondents.
THE MILESTONES ON HOLD
Of the ones who say they have delayed major plans, the biggest sacrifice was homeownership.
A whole 65% delayed buying a home, and 52% put off saving for retirement. Nearly half (45%) delayed buying a car at 45%, and 33% postponed continuing their education. A quarter of the respondents put off living independently. Another 22% delayed getting married, and 20% postponed having children.
Are the loans connected to milestones? How can we be sure? There are always more pieces to the puzzle. Even so, 87% of those who delayed a milestone said they would be more likely to move forward if their monthly student loan payment were lower.
Outside of the financial aspect, 55% of borrowers surveyed felt student debt affects their daily lives either somewhat or significantly. Carrying debt affects them emotionally.
“Common mood or emotional changes from student loan debt can look like irritability, anxiety, avoidance, sadness, difficulty making decisions, and heaviness,” says Lindsay Bryan-Podvin, a licensed master social worker and financial therapist at Mind Money Balance.
One of the report’s most surprising findings is how many borrowers don’t fully understand the loans they’re repaying. Nearly 47% of borrowers currently in repayment don’t know what their student loan interest rate is. It is a figure that becomes even more concerning as federal repayment options continue to change.
“We have had a big financial literacy problem in this country for years,” says Betsy Mayotte, president and founder of The Institute of Student Loan Advisors (TISLA). At a moment when millions of former SAVE Plan participants are being required to choose new repayment options, a lack of understanding could lead to costly decisions.
GRADUATES STILL SEE VALUE IN THEIR EDUCATION
Looking back, 48% of respondents who borrowed for college said they wouldn’t take out student loans again if given the chance to start over. That’s pretty huge considering that almost nine in ten borrowers completed degree programs their loans helped fund.
Despite loans looming overhead, borrowers seem to remain hopeful they can pay off their debt within the next decade. According to a recent piece by Gallup, most alumni at 71% say their education was worth the cost, and a whole 93% say they would choose to earn their degree again.
Still, believing in the value of a college degree doesn’t mean everyone feels as though they can afford one.
“Americans haven’t lost faith in the value of college, but they’re increasingly unsure they can afford to take part,” said Courtney Brown, vice president of impact and planning at Lumina in a press release this summer. “That gap between belief and access should be a wake-up call. We need to make sure higher education is not only worth it, but within reach for everyone who wants to pursue it.”
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