The Impact Of Student Loan Debt On Millennial Finances

 The Impact Of Student Loan Debt On Millennial Finances - See how you can lower your outstanding student loan balance to achieve the American dream of home ownership. (iStock)

Home ownership can be a stable way to build sustainable wealth while easily paying living expenses. But buying a home can be challenging for borrowers with other significant financial obligations, such as student loan debt.

The Impact Of Student Loan Debt On Millennial Finances

Student loan debt is keeping 35% of millennial borrowers from buying a home, according to a new study from the National Association of Realtors (NAR). It also has an impact on home ownership among other generations; A fifth (19%) of baby boomers said student loan debt prevented them from buying a home.

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Fortunately, there are many ways to make your student loan debt more manageable so you can achieve your financial goals. Consider your options, such as income-based repayment plans and student loan modifications, in the analysis below.

If you decide to refinance your student loan debt, be sure to compare interest rates at different lenders to make sure you're getting the best interest rate for your financial situation. You can compare prices in minutes without affecting your credit score.

It's clear that paying off student loans can be an obstacle to the American dream of home ownership. Nearly 30% of all borrowers surveyed said their student loan debt is preventing them from getting a home loan.

More than half (51%) of student loan borrowers who do not yet own a home said student loan debt is keeping them from owning a home, and three-quarters (72%) said student loan debt is holding them back from buying. at home . Half (50%) of current homeowners say student loan debt has delayed their home purchase.

Of Older Millennials With Student Debt Say Their Loans Weren't Worth It

The financial impact of student loans doesn't end there. More than a third (35%) of borrowers said college debt kept them from taking a break. About 3 in 10 say student loan debt has influenced their decision to buy a car or continue their post-secondary education.

The financial impact of student loan debt varies by generation. For example, 22% of Gen Z borrowers say their college debt has prevented them from renting on their own and moving out of their parents' or guardians' homes. 29% of Millennials are holding back on starting a small business.

You don't have to sacrifice your financial security while paying off your student loans. There are many ways to pay off your loans faster, lower your monthly payments, and possibly eliminate your student loan debt entirely.

A student loan modification is when you take out a new loan to better repay your existing student loan. According to data from Credible, now is a good time to refinance your college debt, as student loan refinancing rates are still at an all-time low.

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By refinancing to a lower interest rate, you can pay off your debt faster or lower your monthly payments. Qualified borrowers who refinanced with Credible's long-term loans saved more than $250 in monthly payments, while those who refinanced short-term loans shaved off years of student loan payments and saved nearly $17,000 in interest.

Keep in mind that consolidating your federal student loan into a private student loan may give you a lower interest rate, but you'll lose federal benefits like the COVID-19 emergency forbearance, income-driven repayment (IDR) plans, and student loan forgiveness.

Not sure if refinancing is right for you? Browse student loan rates from real private lenders in the table below and use Credible's student loan calculator to see how much you could save.

Federal student loan borrowers can enroll in income-driven repayment (IDR), which limits student loan payments to 10-20% of your income. You can enroll in the IDR plan on the Federal Student Aid (FSA) website.

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Federal student loan forbearance will soon end, and payments will resume in February 2022. Still, many borrowers are still not ready to resume federal student loan payments. Eligible federal borrowers may be eligible for an additional 36-month delay in economic hardship or unemployment.

If you have a personal loan, you can apply for forbearance. Keep in mind that each lender has its own eligibility criteria for deferrals.

The Department of Education has canceled nearly $10 billion in student loan debt from more than 563,000 borrowers since President Joe Biden took office. But that's only a fraction of the 45 million student loan borrowers who have student loan debt.

The Biden administration has made it easier for borrowers to get their student loan forgiveness through the Total and Permanent Disability (TPD) Discharge Program and the Closed School Disability Program. But if you don't qualify for these programs, consider your alternative student loan forgiveness options:

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Even if you don't qualify for student loan forgiveness, you have options to make your student loan debt more manageable. Connect with a knowledgeable loan officer at Credible to explore student loan repayment options, including refinancing.

Have a finance-related question, but don't know who to ask? Email the Money Expert at moneyexpert@credible.com and your question may be answered with credibility in the Money Expert column.Mountain View, CA — Here are some things we know about Millennials: Student debt is high. They are renting or sharing instead of buying. And they're pushing back major life milestones like marriage more than ever.

While each of these statistics has countless causes and effects, a new survey from an online education website shows that high levels of student debt have had a far-reaching and persistent impact on how millennials live their lives.

A recent online survey of college graduates ages 21-35 found that a heavy student debt burden affects:

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An additional 32% reported that the cost of education and the prospect of debt influenced where they decided to attend college in the first place.

He conducted a similar survey of college-educated Baby Boomers. As the chart below indicates, Boomers' lives were relatively unaffected by the student debt they took on.

The average student debt burden is higher now than it was in previous generations. According to the study, 51% of millennial graduates leave school with more than $10,000 in debt. Adjusted for inflation, only 26% of Baby Boomers graduated at the same rate. Only 38% of boomers were able to graduate debt-free, while 57% of boomers did.

Figures 2A and 2B: Percentage of college graduates with debt (top, millennials, bottom, baby boomers) leaving school.

Student Loan Debt And Its Impact On Financial Goals

This may help explain why 39% of millennial respondents agreed they graduated with a lot of debt, which they felt was difficult to pay off. Only 15% of Baby Boomer respondents agreed with this statement.

Figure 3: Rating of whether respondents agree with the statement that they graduated with a lot of debt that is difficult to pay off (Left, Millennials, Right, Baby Boomers)

Additionally, a full 79% of millennial respondents agree that student loans are a problem for young people in general, with only 4% of respondents disagreeing.

Figure 4: Responses of millennials who believe student loans are a big problem for young people

Which Generation Has The Most Student Loan Debt?

Part of the solution to the student debt crisis may lie in clarifying the terms of student debt or better explaining what debt burdens mean to college students. The survey found that 20% of millennials said they had a good understanding of college finances (including tuition costs and student debt) when they first started school. About half -- 49% -- responded that they understood college finance "not well" or "not at all."

The survey was completed online from June 11 to June 24, 2015 with 200 respondents per age sample. Respondents who are part of the "Millennials" sample are between the ages of 21 - 35, while Baby Boomers are between the ages of 50 - 65.

It is the largest and most comprehensive online learning site. We are on a mission to make education accessible to all. As the top resource for more than 15 million students a month, we offer a place where students can study any subject, prepare for any test, and earn transferable college credit from over 2,000 institutions. We have an extensive video library of over 10,000 short, fun and engaging lessons. It also offers guidance counseling to help students save money and make informed decisions about their education and career. Watertown, Mass., May 16, 2016 Unexpected roads - and the entire economy as a result. From newly graduated students to baby boomers nearing retirement, 72 percent of those with student debt say it affects their daily lives, and 77 percent say it has made it harder to "live my life the way I want to." With 35 percent of job openings expected to require at least a bachelor's degree by 2020[1], this new data points to a bleak outlook for current and future generations of borrowers and borrowers.

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