It Takes Most Students Twice As Long As They Hoped To Pay Off Their Student Loans
About 70% of college students – equal to about 44 million Americans – owe a collective $1.4 trillion in student debt. And while the standard repayment plan for federal loans suggests that they should take no more than 10 years to pay back, in reality, it regularly takes twice that long.
“Research from Citizens Financial Group suggests that 60 percent of student debt borrowers expect to pay off their loans in their 40s. Data collected at the state level supports these findings. A study from the OneWisconsin Institute finds that it takes graduates of Wisconsin universities 19.7 years to pay off a bachelor’s degree and 23 years to pay off a graduate degree.”
Meanwhile, the Fed reports that there are 6.8 million student loan borrowers between the ages of 40 and 49 and that together, these graduates hold a collective $229.6 billion in debt. That means that Americans in their 40s with student loan debt each have an average balance of $33,765, according to CNBC.
Many predict that the long-lasting effects of student debt threaten US housing prices as fewer millennials will be able to afford a home, while also delaying retirement.
“The Federal Reserve Board of Washington, D.C. found that an increase in student debt has led to a decrease in home ownership, and a study from NerdWallet predicts that students who graduated from college in 2015 will have to delay retirement until the age of 75, in part because of the increasing burden of student debt.”
CNBC points out that students should plan out how long it will take for them to pay off their loans, but this is easier said than done: Today’s graduates face an uncertain job market, which is forcing more young Americans – members of the so-called millennial generation – to live with their parents for want of work.
Perhaps, more students should consider trade schools, which are cheaper and can often lead to steady career-track work. And as we reported last week, many manufacturing companies are recruiting heavily for well-paying management jobs that don’t require a college degree.