Student Debt Has Disastrous Effect on Life Decisions for Millions of Americans

In a 50-state survey for the new report “Buried in Debt,”  7,095 borrowers participated in a research study on the state of student loan borrowers in 2018. As total outstanding student loan debt soars past the $1.5 trillion mark, a figure that has tripled since 2005. The report takes a look at the toll stress and financial strain have taken on the lives of borrowers nationwide.

Among those responding to the survey, borrowers owed an average of $87,500 in debt but made an average annual income of $60,000.

Faced with what many consider insurmountable debt, borrowers have had to postpone marriages, buying houses and other life decisions indefinitely. “Regularly, I contemplate selling everything and living in my car to help free up money to pay off the debt sooner,” wrote a female respondent from Texas. She reported feeling as though she has had to put off having children, marrying or purchasing a home due to the high cost of student debt repayment.

The study found that student loan debt interfered in people’s plans for marriage and families, leading 19% of respondents to delay getting married and 26% to put off having children.

Student debt impacted everything from financial security to philanthropy.  Debt prevented 80% of borrowers from saving for retirement, 56% from buying a home, 42% from buying a car, and 50% from contributing to charity, according to the report. More than 85% said the debt was a major source of stress, and one in three said debt is the biggest stress in their lives.

Key findings from “Buried in Debt”:

  • Almost nine of 10 student loan borrowers are struggling to make payments.
  • 20% reported they couldn’t make the next payment
  • 44% say it would be a struggle.
  • Most borrowers reported they have less than $1,000 in their bank account, with high student loan payments to blame.
  • 58% of borrowers have taken a hit to their credit
  • 10% failing a credit check for a job interview
  • 13% failing a credit check for an apartment.
  • 6% of borrowers have had their Social Security payments or wages seized.
  • 18% reported being in default on at least one student loan. This is the same percentage of borrowers federal agencies show are in default in the United States: 18%, or 8 million out of 44 million.
  • 33% of the borrowers report their student loan bill is higher than their rent or mortgage bill.
  • 65% saying their monthly student loan bill is more than their food budget for the month.
  • Nearly 40% of borrowers report they have been unable to achieve their career goals.
  • 28% said their student debt prevented them from starting a business.

To make things worse, a troubling number of student loan companies have been prosecuted for predatory practices, such as abusive loan terms or convincing a borrower to accept unfair terms through deception or coercion.

  • 60% of borrowers reported that their loan servicer has given them “confusing” or “unhelpful” advice about their loans
  • 25% of the respondents had confronted a surprise additional fee from their servicing company
  • 57% had experienced unexpected demands after a sudden change in the loan servicer
  • 42% had trouble negotiating a change to the repayment plan when they had financial hardships.

Meanwhile, borrowers continue to default on student loans every 28 seconds.

A survey respondent from Pennsylvania commented on her plight. “My student loans have prevented me from really living,” she wrote. “They stress me out more than I can explain. I pay and pay and pay, and the balance never seems to go down.”

 

 

Photo: “In Memory of Student Load Debt” byAlan Levine is licensed under CC BY 2.0

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