Introduction The Burden of Student Loan Debt:
Student loan debt is a growing crisis affecting millions of individuals, with far-reaching consequences that extend well beyond the financial realm. The burden of student loans can create significant financial instability, often leading to a life of living paycheck to paycheck. This debt can delay major life milestones, such as marriage and homeownership, as individuals struggle to manage monthly loan payments alongside other expenses.
While seven-figure student debts are still uncommon (according to a Wall Street Journal piece on Meru, around 100 people countrywide are in this situation), large loans are becoming increasingly widespread. According to The Brookings Institution, 5% of student loan borrowers currently owe more than $100,000, and 170,000 students nationally owe more than a quarter million in federal loans alone.
Travis Hornsby, a student loan adviser whose typical client owes $280,000, says he has dealt with numerous graduates with debts in the million-dollar range, mostly specialists and dentists.”They make a lot of money, but not enough to cover that level of debt service,” Hornsby said in an essay for Business Insider.
Financial Instability:
Amber Williamson was applying to graduate schools after completing her bachelor’s degree and teaching English overseas for a year. At 24, she hadn’t settled on a job, but she was aware that her $60,000 in school loan debt limited her options to just sectors that could provide enough money to cover the payments.
“I’m doing everything right, but still being penalized for something I’ve been told to do,” she complained to MarketWatch.Williamson isn’t alone. According to American Student Assistance, 53 percent of survey respondents identified student loan debt as a major issue in their employment decisions. Borrowers are sometimes left with no choice except to pursue occupations they have no actual interest in, merely for a wage that might help offset their tuition.
Delayed Life Milestones:
More than one-third of millennials live with their parents, a trend that has grown significantly in recent years. The Federal Reserve discovered that 30 percent of the rise was related to young persons’ shifting debt burdens, which included student loan debt.
Natalie Bacon and Liz Stapleton may not know each other, but they do have one thing in common: they borrowed a lot of money to earn legal degrees, only to discover that they disliked practicing law. Bacon was horrified to learn after graduation that the interest she had accrued while in school had already increased her debt to $200,000.
Both women took the risk of leaving their law jobs, only to find success in financial advice and debt management writing. However, many other attorneys and physicians are still locked in jobs they despise due to debt.
Career Choices:
During her undergraduate and doctoral degrees, Becca of Surviving Student Loans was aware that she would be in debt for at least $90,000 — , but she had not considered how the continually collecting interest would effect that sum. For the first three years following graduate school, she made the minimal monthly payments. She now owes $124,000, with interest accounting for almost a fourth of the total.
Looking back, Becca does not regret earning her degrees, but she does regret losing paid credits numerous times when she switched institutions. She also wished she’d invested some of the money she’d earned working part-time in school into.
During her undergraduate and graduate studies, Becca of knew she was going to have at least $90,000 in debt — but she didn’t think through how the constantly accruing interest would affect that total. For the first three years after graduate school, she made her minimum payments every month. Now, she owes $124,000; about a quarter of that is interes
Looking back, Becca doesn’t regret getting her degrees, but she does regret that she lost paid credits several times when she transferred schools. She also wishes she’d put some of the money she’d earned working part-time in school toward her debt, even though it wasn’t required. She’s currently budgeting aggressively and trying to earn money on the side so she can put as much of her $50,000 salary toward debt repayment as possible.
Mental Health Impact:
Increases in student loan debt may have had a role in driving down homeownership rates in recent years by affecting borrowers’ ability to qualify for a mortgage and their willingness to take on further debt. Recent studies have indicated that many young people regard student loan debt, as a serious hindrance to house ownership, which backs up the researchers’ findings.
They studied the facts and discovered that there is something to this: Every 10% rise in student loan debt is associated with a 1 to 2 percentage point decline in homeownership in the first five years after graduation.
According to American Student Assistance, one in every five former students delays marriage and almost one in every three postpones beginning a family because of student loan debt.
Some who married someone with a lot of college debt eventually regret it. One BuzzFeed responder stated that his wife’s student loan burden was wrecking their life.
Saving and Investment:
Another American Student Assistance poll discovered that 62 percent of respondents delayed investing for retirement owing to student loan debt. Worse, according to the same data, the number of adults over 65 with school debt surged by 977 percent between 2005 and 2015.
One of the most concerning aspects of having student loan debt in retirement is the possibility of losing your Social Security benefit. According to the ASA research, almost 173,000 Social Security claimants had their benefits withheld in 2015 for this reason.