Help for unaffordable student loan debt

Posted by DebtCleanse on Nov 27, 2018 10:00:00 AM

Student loans are the single largest source of non-housing debt in the US. Americans hold a staggering $1.5 trillion in student loan debt, and that number is only going up. Our culture continues to push the notion that a college degree is some sort of guarantee of a good job and financial stability, even as skyrocketing tuition, stagnant wages, and a challenging job market mean that millions of students graduate with tens, or even hundreds of thousands of dollars in debt. From the moment they leave school, these borrowers are funneled into a system designed to extract payments for decades.

Take a look at the facts:

  • The cost of college rose 8x faster than wages between 1989 and 2016.
  • In 2014 only 65% of recent college graduates were employed.
  • 51% of the employed graduates were in jobs that did not require a college degree. 
  • In 2015 60% of the 38 million Americans with student debt (22 million in total) were not making payments.
  • Every quarter 250,000 borrowers default on federal student loans.
  • Click here for more statistics on American student loan debt.

 

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The average cost of a four-year degree was up to $104,480 in 2016, double the cost from 1989 after adjusting for inflation. Meanwhile, real median wages only increased from $54,042 to $59,039 in that same period. So it’s no surprise that people are having to borrow more often, borrow larger amounts, and that seven out of ten students graduate with debt. And the impact of that debt can be farther reaching than you might realize.   

 

More than just Millennials

When most people hear the phrase “student loans,” they picture someone in their 20s, fresh out of school. But in fact, the number of borrowers between the age of 45-74 with education-related debt have sharply increased over the last two decades, and those borrowers tend to owe larger amounts than borrowers under age 35.     

Some of these borrowers are still paying for their own education, or decided to go back to school later in life. The majority, however, are parents—and increasingly grandparents—who are helping their child or grandchild through school. An analysis by NerdWallet found that the number of borrowers with Parent PLUS loans nearly quadrupled between 1989 and 2012. 

 "The spiraling cost of college education is stretching families,” says Richard Johnson, director of the Urban Institute’s program on retirement policy. “And one of the responses to that is parents and grandparents are more likely to take out these educations loans than they might have been in the past.”

 

When debt always comes first

Millennials, Gen Xers, and Baby Boomers alike are finding that their student loans are standing in the way of them enjoying some of life’s biggest moments.

 “Student loan debt has been a barrier in making key life decisions and planning for the future,” said Ben Brown, founder of the Association of Young Americans AYA). A joint report by the AARP and the AYA found that because of student loan debt:

  • 36% of Millennials, 26% of Gen Xers, and 32% of Boomers have put off buying a house.
  • 30% of Millennials, 25% of Gen Xers, and 30% of Boomers have put off buying a car.
  • 25% of Millennials, 21% of Gen Xers, and 18% of Boomers have been unable to move out of their current living situation.
  • 41% of Millennials, 38% of Gen Xers, and 31% of Boomers have been unable to save for retirement.

 That last statistic may be the most dangerous in the long run. Millennials are entering the workforce at a time when employers are contributing less and less toward their employees’ retirements.

 “With Gen Y being in defined contribution plans, the time for them to really get ahead is in their 20s and early 30s, but if they have a huge student loan, they really can’t do that, ” said Michael Ericson, research analyst for LIMRA’s Secure Retirement Institute

  

An unhealthy burden

Student loan debt can also affect your daily life in ways that are discussed all too rarely. The stress can take a measurable toll on your psychological and physical health.

A 2017 Student Loan Hero survey of 1,000 borrowers found that:

  • Over 61% said they felt their worries about their debt were spiraling out of control.
  • 5% said worry about their student loan debt was causing insomnia.
  • Over half associated their debt with feelings of dread, irritability, and depression.

More than two thirds said their anxiety about their debt was causing physical symptoms including headaches, muscle tension, and stomachaches.

“Debt is becoming a much more visible issue in this country because it’s so ubiquitous, and such a big issue that young adults are dealing with,” said Elizabeth Sweet, lead author of a 2014 Northwestern University study that showed similar links between debt and health issues. “These health issues are a warning for more health problems down the road, so we have to think about this as a long-term phenomenon.”

Additionally, nearly 75% of respondents in the Student Loan Hero survey said they had shut other people out of their lives because of the stress of their student loan debt.

“I lose motivation because I feel stuck in a rut. I lose motivation to cook, to eat, to leave the house, and I feel alone in my feelings,” said one respondent. Another explained, “I avoid doing things with friends and family because I don’t want them to know how broke I am.”

This paints a picture of student debt sufferers as withdrawn and isolated, stressed to the point of physical pain, but too paralyzed by anxiety and shame to do anything to break the cycle.

 

Help is on the way

DebtCleanse founder and CEO Jorge Newbery knows what it feels like to have the stress of debt overtake your life, and wrote the book on getting out of unaffordable debt to help others do the same. Click here to download a free chapter on student loans. You’ll learn tips and tactics that you can use to fight back against the system of endless payments and sleepless nights.

If you’re one of the millions of Americans paying more from each paycheck toward your student loan than toward groceries, your debt may feel insurmountable. The good news is, there are steps you can take if you’re facing debt you can’t afford.

Looking for more assistance? DebtCleanse is launching in early 2019. You’ll be able to create a free account to get access to the debt tracker and Q&A forum, or upgrade to a full membership at any time to connect with our network of attorneys who are waiting to help you make your debt a thing of the past. Don’t live under the shadow of your debt a second longer than you need to.

Join our waitlist now to get notified the moment DebtCleanse goes live.

Topics: Student Debt

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