Student loan debt has forced many younger Americans to delay other major financial decisions, according to a new study. But despite the challenges, the vast majority said debt would not have prevented them from pursuing higher education in retrospect.
Millions of Americans are burdened with student loans. It has grown over the past two decades with Americans with more than $ 1.7 trillion in student loans, including more than 43 million Americans with $ 1.6 trillion in federal student loans. It is the second largest form of debt in the United States behind home mortgages.
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According to a report released Wednesday by Bankrate.com, 74% of Generation Z borrowers and 68% of millennials who took out a student loan debt for their higher education delayed a major financial decision as a result of their debt. This is higher than it has been for the older generations: about 54% of Generation X and 42% of baby boomer borrowers said they have delayed a major financial decision due to their student loan debt.
Among those who postponed major financial decisions, 27% generally said they delayed emergency savings, 26% said they postponed retirement savings, 24% delayed payment other debts and 23% postponed the purchase of a house.
“Savings are the biggest victim of student loan debt service, as saving for emergencies and saving for retirement tops the list of financial decisions that are most often delayed as a result of student loan debt. said Bankrate.com chief financial analyst Greg McBride.
Although financial decisions for those who were delayed due to student loan debt were spread across age groups, 23% of Generation Z and 19% of millennials said they were postponing having children. due to student loan debt compared to 9% of Generation X and 2% of baby boomers. At the same time, 18% of Generation Z and 15% of millennials said they delayed marriage, compared to 6% of Generation X and 2% of baby boomers.
Despite the burdens, 59% of those who graduated with a student loan debt said higher education has improved their career opportunities or income potential. McBride said that these signals while saving could be delayed, for many it will lead to a greater capacity for long-term savings.
Only 10% of those applying for a school loan said they would not have completed higher education in retrospect.
But for many, student debt is not free of repentance. More than half of borrowers said they would still have gone to college, but would have done something different: apply for more scholarships, work while in school, get a different degree, or attend a cheaper school.
The Biden administration has been struggling with how to deal with the student debt crisis. Earlier this month, the White House extended the pause in federal student loan payments that has been in place since the start of the coronavirus pandemic until August. It means that the vast majority of borrowers have not had to make a payment on their federal student loans in more than two years. But the administration has not made a decision on whether President Biden will cancel the student loan debt, as requested by some Democratic lawmakers.
In a recent interview, White House Press Secretary Jen Psaki said canceling federal student loan debt is “still on the tableBut the White House has also called on Congress to act.
Critics of canceling student loan debt have argued for equity. Some have also pointed out that simply canceling student loan debt does not get to the root of the problem that the cost of higher education continues to rise.
The average cost of tuition and fees for a full-time undergraduate student in a four-year public school was $ 10,740, according to the College Board. For out-of-state students, the cost was more than $ 27,000. The average cost of a private nonprofit education during the most recent school year was more than $ 38,000, the College Board found.
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