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Soaring student debt has been devastating for young adults.
As the cost of a college education rose, more and more students had to borrow to help pay for their education. Now, recent graduates are delaying some of life’s milestones because of the burden of their loans.
Americans of all generations have made such sacrifices, from saving for retirement to buying a home.
However, more than three-quarters, or 74%, of Gen Zers and 68% of Millennials who took out student loans for their college education postponed a major financial decision as a result, according to a report from Bankrate.com. This compares to 54% of Gen Xers and just 42% of Baby Boomers.
“There is more debt for recent graduates and the burden is greater than what their parents may have faced,” said Greg McBride, chief financial analyst at Bankrate.com.
Overall student debt now exceeds $1.7 trillion. Seven in 10 seniors graduate with debt, owing about $30,000 per borrower.
Still, 59% of graduates with student loans said their college education improved their career opportunities and earning potential, Bankrate found.
“The lifetime income bonus on a college degree is still around $1 million,” McBride said.
To ease some of the burden, President Joe Biden used his executive powers to extend the pause in federal student loan payments until September.
Nearly 43 million federal borrowers are hoping that mass student loan forgiveness could be Biden’s next major move on the debt problem.
“Until there is certainty, as a planner, I would encourage these people to continue making payments and reducing principal while interest accrual is paused,” Joe Buhrmann said. , Certified Financial Planner and Senior Financial Planning Consultant at Fidelity’s eMoney Advisor. .
“At the very least, you should redirect the payments that had been applied to your student debt to reduce other debts or accumulate savings.”
Meanwhile, almost two-thirds of parents still worry about being able to cover the cost of higher education in the years to come, according to a separate report from Discover Student Loans.
“This reminds everyone that when it comes to college, families need to make wise financial decisions, including assessing their resources, expected costs, and the amount of debt the student and family would incur. as well as the outlook for all parties to service any debt incurred,” Buhrmann said.
“There are many ways to reduce the cost of college education,” he added, including cutting some credits at community college before moving to a four-year institution, relying more on grants that don’t. don’t need to be reimbursed and on scholarships. , research cheaper schools, or live at home and commute.
“In the worst case, there is almost always the availability of student loans.”