The result is a generation of graduates facing an unprecedented debt burden. Another borrower defaults every 28 seconds, joining the eight million Americans already in default on their student loans. The consequences, including hefty collection fees and wage garnishment, further exacerbate the looming debt spiral.
To better understand not only the high-level statistics but also the personal burden of student loans on borrowers, Summer partnered with Student Debt Crisis, a nonprofit advocacy group dedicated to helping student loan borrowers, to conduct a nationwide survey of 7,095 borrowers across all 50 states.
Our research reveals a somber portrait of monthly payments fueling a cycle of high stress, scant financial freedom, and limited career opportunities. Here are some of the key findings:
1. Borrowers face significant financial hardship
Many borrowers have higher debt loads than annual incomes: the average debt among respondents is $87,500, while incomes average around $60,000.
88% of borrowers reported difficulty making their payments, including 18% in default on at least one student loan, and another 20% expecting to be unable to make their next loan payment.
This struggle both reflects and contributes to the limited financial cushion of many borrowers: 65% of respondents reported having less than $1,000 in their bank account.
As a result, 80% of borrowers have been unable to start saving for retirement, and 56% have been unable to start paying for a home, demonstrating the impact of student debt on the broader economy in terms of savings and consumption patterns.
2. Student debt is limiting career opportunities
Despite the promise of higher education as an investment for brighter economic prospects, many borrowers’ experiences reflect a contradictory narrative: 39% of borrowers reported that student debt is preventing them from achieving their career goals.
“Student debt has been responsible for the majority of my decision making as an adult,” said Erin, a married Maine resident. In addition to being unable to pay for a traditional wedding or put a down payment on a house, Erin and her husband “have never started or attempted to start any of the many business ideas he has” despite the business degree for which he took on the debt in the first place.
3. Student debt is impacting every area of borrowers’ personal lives
86% of borrowers reported that student debt is a major source of stress, impacting various aspects of their personal lives. For example, 19% percent of our survey respondents have delayed getting married as a consequence of their debt burden.
An even greater percentage, 26% of respondents, have delayed having children. Several women related their personal stories of waiting to have children until they could pay off more of their loans, after which they found out that it was too late for them to have children.
While no borrowers’ experiences are identical, our survey provides a glimpse of the far-reaching “domino effect” that student debt has on borrowers today. “I have put off having children, marrying, or purchasing a home due to the high costs of student debt repayment. Regularly, I contemplate selling everything and living in my car to help free up money to pay off the debt sooner,” shared Melissa in Texas.
Sean in Maine echoed her sentiment: “[Student] debt has been a huge burden throughout our last 10 years. I think my wife and I will both weep the day we are debt free.”