A late April survey from U.S. News & World Report shows that around 37% of respondents say they won’t be able to make federal student loan payments if they resume on Sept. 1, 2022. Another 27.1% say they’ll barely be able to cover their loan payments.
Almost two-thirds of college students will have student loan debt when they graduate. Among the population overall, 15% of American adults are paying off student loans.
Given the monetary amounts involved, it’s not surprising that it’s a financial burden.
Current Balances of Student Loans
Respondents were asked to provide their current student loan balances. The results show why some Americans might be having trouble paying their loans. Almost 40% have student loan balances in excess of $30,000.
Here’s the full breakdown:
— $10,000 or less: 26.5%.
— $10,001 to $20,000: 20.4%.
— $20,001 to $30,000: 13.3%.
— $30,001 to $40,000: 22.1%.
— $40,001 to $50,000: 7.6%.
— $50,001 or more: 10.1%.
When asked how long they’d been making loan payments, 18.6% of survey respondents indicate they are still in school and hadn’t begun making loan payments.
Among respondents who are actively paying their student loans, here are the findings on how long:
— Five years or less: 41.1%.
— Six to 10 years: 30%.
— Eleven to 15 years: 21.2%.
— Sixteen to 20 years: 5.8%.
— More than 20 years: 2%.
The respondents were also asked if they resent their loans. Almost 14% say no, but about 86% say they resent them at least a little. Of those who are making loan payments, 28.9% have been paying for more than 10 years. So maybe a little resentment isn’t surprising.
[Read: Best Private Student Loans.]
Student Loan Borrowers Are Postponing Major Life Events
Although about one out of five say they haven’t put their lives on hold while paying off student loans, the majority report postponing major milestones due to their student loans.
Here are the events that respondents say they’ve been postponing due to student loans:
— Buying a house: 37.1%.
— Saving for retirement: 32%.
— Having children: 19.4%.
— Getting married: 18.1%.
— Changing jobs: 18%.
— Something else not listed: 23.6%.
Student Loans Had Little Bearing on College Major
— Not at all: 37.3%.
— A little: 32.1%.
— A moderate amount: 13.7%.
— A lot: 16.9%.
The survey also asked whether respondents received any kind of guidance before deciding how much to borrow. A majority, 57.3%, say they didn’t get any financial counseling before getting their student loans.
Here’s my rule: You should not borrow more money than you’ll make in your first year of working. This requires a little research, and students need parents and guidance counselors to help them set realistic goals for future income.
We’ve been expecting 17- and 18-year-olds to make major financial decisions when many of them don’t yet have the knowledge required to predict the consequences. Going forward, counseling should be mandatory before students can borrow money for college.
How to Pay Off Student Loan Debt
Not surprisingly, 76.6% favor having their loans canceled. But almost a quarter say they either aren’t in favor or they’re unsure how they feel about it.
Forgiving a portion of federal student loans is under consideration in Washington, but don’t rely on that. If it does come to pass, there could be monetary limits and possibly even income tests. Also, canceling some federal student loan debt might alleviate current monetary pain for borrowers, but it doesn’t get to the root cause of the $1.7 trillion student loan debt problem. As I already mentioned, requiring financial counseling for new college students might be a good place to start.
For now, it’s best to assume your federal student loan payments return this September and start preparing. Here are a few tips to help you pay off your student loans:
— Get educated. If you’re in school now, get advice before you increase your current loan amount. But even if you’ve graduated and have begun repaying your debt, learn about options, such as refinancing or considering jobs that could result in loan forgiveness. Ask your parents and financial aid officers at your school for help navigating this complex industry.
— Stick to a budget. Do this and you’ll avoid wasting money that can go toward reducing your student loans. If you use credit cards, budget the amount you can put on your cards each month. Pay your balance in full every month to avoid credit card debt.
— Sign up for automatic payments. Some lenders offer a discount for autopay. It’s usually in the form of a small interest rate deduction. But don’t commit unless you’re sure you’ll be able to cover the payments.
— Set up a loan repayment account. If you can make your payments and have a little left over, transfer a set amount every paycheck to a repayment savings account. This will add up over the course of a year, and you can use it to make extra payments.
— Refinance if you have good credit. The survey shows 16.7% had only private loans, and more than 27% had both private and federal loans. Before you refinance a federal loan, review the terms carefully. Refinancing a federal loan can cause you to lose benefits and protections that come with that type of loan.
— Increase your income. If it’s time for a raise, ask for it. If you know you can make more money elsewhere, make the leap and get paid what you’re worth. Another option is getting a side hustle if you can work it in with your day job. At the same time, cut back on discretionary spending to increase your monthly cash flow.
I know this seems daunting, but there’s a silver lining when it comes to student loans. Make timely payments, and it will help you build good credit. So take advantage of this opportunity to build a healthy credit history.
But listen, if you feel there’s no way you can make your loan payments, you aren’t alone. Reach out for help today. Talk to your financial aid counselors, your parents and your lenders and explain your situation. If you still need help paying your student loans, contact the National Foundation for Credit Counseling for direction.
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Survey: Almost Four in 10 Can’t Afford Their Student Loan Payments originally appeared on usnews.com