Student loan debt has forced many younger Americans to put off other important financial decisions, according to a new study. But despite the challenges, the vast majority said the debt would not have prevented them from pursuing higher education in hindsight.
Millions of Americans are burdened by student loans. It has skyrocketed in the last two decades with Americans having more than $1.7 trillion in student loan debt, 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.
According to a report published Wednesday by Bankrate.com, 74% of Gen Z borrowers and 68% of millennials who took on student loan debt for their higher education delayed a major financial decision as a result of their debt. That’s higher than it has been for previous generations: About 54% of Gen Xers and 42% of Baby Boomer borrowers said they’ve delayed a major financial decision because of their loan debt. student.
Among those who put off major financial decisions, 27% overall said they put off saving for emergencies, 26% said they put off saving for retirement, 24% put off paying off other debt, and 23% put off buying a a house.
“Savings is the biggest casualty of student loan debt service, with saving for emergencies and saving for retirement topping the list of financial decisions most often delayed as a result of student loan debt,” said Greg McBride, chief financial analyst at Bankrate.com.
While financial decisions for those delayed due to student loan debt were spread across age groups, 23% of Gen Z and 19% of millennials said they put off having children due to student loan debt compared to 9% of Generation X and 2% of baby boomers. At the same time, 18% of Gen Z and 15% of millennials said they delayed marriage, compared to 6% of Gen X and 2% of baby boomers.
Despite the burdens, 59% of those who graduated with student loan debt said higher education has improved their career opportunities or earning potential. McBride said this indicates that while savings may be delayed, for many it will result in a greater ability to save in the long run.
Only 10% of those who borrowed for school said they would not have pursued higher education in hindsight.
But for many, student debt is not without regrets. More than half of borrowers said they would still have attended 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 grappling with how to address the student debt crisis. Earlier this month, the White House extended the pause on federal student loan payments that has been in place since the start of the coronavirus pandemic through August. It means that the vast majority of borrowers have not had 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 write off student loan debt as some Democratic lawmakers have been calling for.
In a recent interview, White House Press Secretary Jen Psaki said paying off federal student loan debt is “But the White House has also called on Congress to act.
Critics of canceling student loan debt have raised a fairness argument. Some have also pointed out that simply paying off student loan debt does not solve the problem that the cost of higher education continues to rise.
The average cost of tuition and fees for a full-time college student at a four-year public state school was $10,740, according to the College Board. For out-of-state students, the cost was more than $27,000. The median cost of a private, nonprofit education for the most recent school year was more than $38,000, the College Board found.