repost­ed from GoodCall.com

by: Ter­ri Williams

June 8, 2016

 

Many stu­dents pur­sue a col­lege degree to obtain the nec­es­sary skills, edu­ca­tion, and train­ing need­ed to enjoy many of life’s plea­sures, such as pur­su­ing a dream job, get­ting engaged and mar­ried, and pur­chas­ing a home or new car. How­ev­er, stu­dent loan debt has cre­at­ed a catch-22 for many col­lege stu­dent and grad­u­ates.

On one hand, a col­lege degree has almost become a neces­si­ty – even for jobs that pre­vi­ous­ly did not require a four-year or even a two-year degree. How­ev­er, col­lege stu­dents are now sad­dled with so much stu­dent loan debt that they can’t afford to live a mid­dle-class lifestyle.

Accord­ing to “Stu­dent Loan Debt: Who’s Pay­ing the Price?” a new report by EdAs­sist, col­lege debt is neg­a­tive­ly impact­ing grad­u­ates in unimag­in­able ways.

Below are excerpts from the report:

 

DEBT FROM GRADUATION TO RETIREMENT

$1.3 tril­lion Nation­al col­lec­tive total of edu­ca­tion debt
$37,172 Amount of debt per new grad­u­ate
71% Num­ber of grad­u­ates com­ing into the work­force with debt
65% Baby boomers who still have stu­dent loan debt

 

 

LIVING DAILY WITH DEBT

82% say their life has been upend­ed by stu­dent loan debt. Among those who expe­ri­ence dif­fi­cul­ty repay­ing their stu­dent loan:

78% Report that it has impact­ed their abil­i­ty to save for retire­ment
56% Say it has kept them from buy­ing a car
50% State that they could not pur­chase a house
41% Hin­dered them from open­ing a cred­it card
21% Are strug­gling to start a fam­i­ly

 

 

LOVE AND DEBT

49% Would delay engage­ment or mar­riage because of their own debt
33% Would be reluc­tant to mar­ry some­one who was also repay­ing loans

 

 

FUTURES IN JEOPARDY

Hin­der­ing future edu­ca­tion

64% Would not pur­sue anoth­er degree as a result of cur­rent debt
63% Said the cost of a future degree was cost-pro­hib­i­tive

 

Sti­fling pas­sion

58% Report­ed debt would force them to take jobs just for high­er pay
50% Agreed that stu­dent loans have lim­it­ed their career choic­es
37% Have been forced to give up their dream jobs com­plete­ly
33% Would take any job they could get just to pay off their loans
30% Have resort­ed to more fre­quent job hop­ping
21% Have found it dif­fi­cult to start a busi­ness

 

Bypass­ing big dreams: If not for stu­dent loan debt:

23% Would like to be a teacher
22% Would like to be an entre­pre­neur
19% Would like to be a doc­tor
18% Would like to be a social work­er
15% Would like to be a nurse

 

 

BUYER’S REMORSE

Many col­lege grad­u­ates bur­dened with stu­dent loan debt may be rethink­ing their deci­sion to bor­row mon­ey. Accord­ing to Bren­dan Cough­lin, pres­i­dent of Con­sumer Lend­ing at Cit­i­zens Bank, the report’s find­ings mir­ror those of his own orga­ni­za­tion.

“A recent sur­vey con­duct­ed by Cit­i­zens found that Mil­len­ni­als expressed buyer’s remorse regard­ing their col­lege invest­ment, with 57 per­cent say­ing they regret tak­ing out as many stu­dent loans as they did.”  That sur­vey also revealed that 36% stat­ed that they would not have gone to col­lege had they known how much it would cost.

Cough­lin tells Good­Call that, on aver­age, Mil­len­ni­als are spend­ing 20% of their income on stu­dent loan repay­ments. “Unfor­tu­nate­ly, the long-term cost of col­lege is lead­ing some grad­u­ates to ques­tion the val­ue of their invest­ment – in many cas­es, before they have ful­ly explored their oppor­tu­ni­ties to sig­nif­i­cant­ly reduce their pay­ments through var­i­ous repay­ment options.”

 

IMMATURITY AND INTERVENTION

Some of the buyer’s remorse may be a result of stu­dents fail­ing to com­plete­ly under­stand the sig­nif­i­cance of get­ting a stu­dent loan. Mack­ey McNeill, CPA/PFS, pres­i­dent and CEO of Mack­ey Advi­sors, and a mem­ber of the AICPA’s Con­sumer Edu­ca­tion Advo­cates Group, tells Good­Call, “While kids going to col­lege may be con­sid­ered adults from a legal per­spec­tive, they are real­ly still chil­dren in their capac­i­ty to under­stand the long-term impact of their deci­sions, and often have no idea what it takes to repay debt.”

And even though they lack basic finan­cial knowl­edge, McNeill says we still let them bor­row tens of thou­sands of dol­lars. In fact, she says, “Par­ents often encour­age kids to bor­row, and per­haps not hav­ing a sol­id finan­cial under­stand­ing them­selves, pro­vide no per­spec­tive of real­i­ty.”

And because a stu­dent loan is such a mas­sive debt, it’s much hard­er to get a han­dle on it. “It is one thing to get your first cred­it card, run up $2,000 in debt and work like crazy to pay it off – this will teach you some­thing, called, nev­er do this again.” How­ev­er, with stu­dent loans, McNeill says bor­row­ers often don’t under­stand how hard it will be to repay the loan. “Instead, we fill their heads, with don’t wor­ry, you’ll be mak­ing so much more mon­ey – no one edu­cates them that there are tax­es to pay, plus all the basics like rent, util­i­ties, insur­ance, and food.”

Many of the respon­dents in the EdAs­sist sur­vey said stu­dent loan debt hin­dered them from pur­su­ing their dream careers. How­ev­er, McNeill says, “Col­lege isn’t about pur­su­ing your dreams; col­lege is about prepar­ing you to make your way in a career.” And she says we need to rethink some of our views on col­lege – and we need exten­sive finan­cial edu­ca­tion.

“In Alco­holics Anony­mous (AA), they have a process called inter­ven­tion, where the fam­i­ly con­fronts the alco­holic about how their behav­ior impacts them; we need an inter­ven­tion process, where we con­front kids with what their life will be like if they take out stu­dent loan debt ver­sus oth­er options,” she says.

McNeill advo­cates oth­er ways to reduce the finan­cial bur­den. “Going to a com­mu­ni­ty col­lege, liv­ing at home, work­ing a few years and sav­ing mon­ey before col­lege – can make a world of dif­fer­ence.” And she says that every­one is not mature enough, at the age of 18, to go to col­lege. “Give them space to grow up, and then talk col­lege.”