About 60% of American adults who have incurred student loan debt have postponed making important financial decisions because of that debt, according to a new Bankrate survey. For Gen Z and Millennial borrowers alone, that number rises to 70%. Student loans prevented these borrowers from saving for retirement or emergencies, buying a home, or paying off other debts, such as credit cards.
Despite this, a majority of American adults with student loan debt say their degree has unlocked career and salary opportunities that wouldn’t otherwise be possible, highlighting the complicated relationship many Americans have with their student loan debt. .
Main findings:
Most American adults say student loan debt has delayed other financial decisions
Among American adults surveyed who currently hold or have held student loan debt for themselves, 59% say they have delayed financial milestones because of their student debt. Emergency funds and retirement savings were the hardest hit, with 27% of respondents delaying saving for emergencies and 26% of respondents delaying saving for retirement.
Age also plays an important role in financial priorities. Young borrowers are more likely to block important financial decisions than their older counterparts. 74% of Gen Z borrowers (aged 18-25) and 68% of Gen Y borrowers (aged 26-41) have put off financial decisions, compared to 54% of Gen X borrowers (aged 42 to 58 years old) and 42% of baby boomers (58 to 76 years old). Among younger generations, Gen Z respondents say they are more likely to put off buying or leasing a car, while Millennials are more likely to put off boosting their emergency fund and l buying a house.
However, there are commonalities between the age groups. In every generational category – with the exception of the silent generation (77+) – around 25% of respondents report delaying saving for retirement, saving for emergencies and paying off other debts.
However, Bankrate chief financial analyst Greg McBride warns borrowers against postponing payment of other debts, especially credit card debt. “Debt repayment should prioritize high-cost credit card debt, especially over federal student loans, which have many favorable provisions unavailable on other debt, such as deferment, repayment income-tested or debt cancellation in some cases.”
Nearly 6 in 10 degree holders say college has been beneficial for salary and career growth
Although most borrowers say their debt has prevented them from making important financial decisions, 59% of degree holders say their higher education has opened up career opportunities and increased their earning potential. Only 17% say higher education has had little effect, and 19% say it has had no effect.
Even with the burden of student debt, McBride says the benefits of a college degree could be worth it. “For many, this will mean a greater ability to save over the long term,” he says.
Data from the Bureau of Labor Statistics confirms this: for full-time workers aged 25 and over, median weekly earnings are $524 higher for those with a bachelor’s degree than for those with only a bachelor’s degree. high school diploma.
Young borrowers most likely to regret student loans
Gen Z and Millennial borrowers are more likely than Gen X and Baby Boomer borrowers to look back with regret at how they financed their college education. Only 66% of Gen Xers and 52% of Baby Boomers say that looking back, they would do something different with their student loan debt. In contrast, 85% of Gen Z and 77% of Gen Y say they would change some part of their education, with most regretting not working or working too little while in school.
Many Gen Z and Millennial students also say they would get a degree in a different field, attend a less expensive school, apply for more scholarships, or go to a community college rather than a four-year university.
Regardless of their age, only 10% of respondents say they would not have gone to university in hindsight.
How to Manage Your Student Loan Debt
According to the Association of Public and Land-Grant Universities, the average student loan debt for borrowers who earn their bachelor’s degree at a public university is $25,921. For those attending private universities, out-of-state schools, or graduate programs, that number can be much higher, leaving borrowers to start their professional careers with thousands of dollars in student debt. However, there are several strategies borrowers can use to repay their loans while making other money movements.
In the short term, borrowers with federal student loans can take advantage of the current student loan interest and payment pause, which was recently extended through August 31, 2022. The extension should help many borrowers who are struggling. struggling to commit to other financial goals. ; in the Bankrate survey, 74% of eligible borrowers predicted that an extension of the student loan forbearance period would have a positive impact on their personal finances. Meanwhile, borrowers can reallocate federal student loan payments toward other financial goals.
There are other ways to manage student loan debt beyond the current payment break. For example, if you’re saving for a house and you’re having trouble making your monthly federal student loan payments, the U.S. Department of Education offers income-based repayment plans that base your monthly payments on income and family size. The reduced monthly payment can give you wiggle room in your budget to put more aside each month for a down payment.
If you have private student loans, consider refinancing if you are offered better terms and a lower interest rate. If your financial goal is to bolster your savings or emergency account, refinancing could allow you to fund these accounts more quickly by saving money on interest charges or choosing a longer repayment term for reduce your monthly payment.
Methodology
Bankrate.com has commissioned YouGov Plc to conduct the investigation. All figures, unless otherwise stated, are from YouGov Plc. The total sample size was 3,939 adults, of whom 1,442 have, or had, student loan debt for their own education. The fieldwork was undertaken from March 29 to April 1, 2022. The survey was conducted online and met rigorous quality standards. It used a non-probability sample using the two upstream quotas during collection, and then a downstream weighting system designed and proven to provide nationally representative results.