According to US News, 70% of recent college students graduate with student loans. Student loan expert, Mark Kantrowitz, estimates the average 2016 grad to hold $37,172 in student loans. A recent survey found that 59% of millennial graduates have no idea when their student loans will be paid off. If those stats aren’t enough to make you say “WTF”, let’s add to it that there are 44 million borrowers in the United States alone with a total debt approximated at $1.4 TRILLION! Unfortunately, I am one of these 44 million borrowers and despite the efforts President Obama made to help reduce the burden imposed by student loans, I believe there is some ugly truth about student loan debt we all want to shout from the rooftops.
Considering the fact that around 15% of the US population has student loans, I think it’s time we consider this a crisis. An alarming number of borrowers have defaulted on their loans (i.e. they aren’t paying them) and are then being slapped with late fees, dings to their credit, and overall mental distress. Borrowers are often unable to buy cars or homes as the student loans often increase their debt-to-income, making them unsuitable borrowers in the eyes of lenders. It is my opinion that this creates a “damned if I do, damned if don’t” cycle, in which one feels as though they are making student loan payments, only to still not be able to afford the things you’re supposed to get to enjoy in adulthood.
I will admit, I feel as though student loan companies have started to make efforts to help students. Depending on the type of loan and your standing, you may be eligible for numerous programs that will reduce your monthly payments or have your loans forgiven altogether (more on this topic Thursday). However, I feel that the companies do a bad job of considering how much you owe to other creditors. For example, each of my four loan providers believing I can afford to pay them $200/month, means $800/month total and I can’t afford that. In my opinion, it would make a lot more sense if they considered what you owe (and subsequently pay) other loan providers.
Student loans are crippling millennials and stifling their attempts to step into adulthood. Borrowers are often forced to live like college co-eds (I still love Ramen Noodles) because they simply can’t afford healthy groceries or eating out. While I personally try to pay all of my loans on time and maintain lines of communication with my loan provides, I’d be lying if I said I hadn’t contemplated (multiple times) writing them an IOU and spending that money elsewhere. Though it may be irresponsible in the long run, I totally understand why my fellow millennials sometimes throw caution to the wind.
The truth of the matter is depending on how much you owe, you could easily still be paying on your student loans when it’s time for your kids to head off to college. How in the world am I supposed to save for their college tuition when I’m still paying for my own???
It is AWESOME that states and institutions are starting to make moves to provide FREE college education. I believe this will result in more applicants and attendees than these schools can support so it’s somewhat only a band aid to the problem. I wholeheartedly believe their should be some kind of federal regulation or morality clause (OR SOMETHING) that puts a cap on what private institutions can charge. The cost of education is just too darn high, especially when millennials are graduating and can’t even find a job in their field!
If you’re one of the 44 million borrowers in the US or even have loans from obtaining your education in another country, I want you to remember, you’re not alone. You’re not the only one imagining all the other things you could be spending that hard earned money on or the only one seriously contemplating no paying the loans altogether. I HATE paying my student loans, but I do it because I hope that one day I will find a job in my field, that I love, that will be worth the exorbitant cost of my education.
Do you have any student loans? What’s one thing you wish you could tell your senior high school self regarding student loans?