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.”