Skip to content

Buried in Debt: Impact of College Debt on Life Beyond College

November 1, 2018

Student loan debt is a major national problem, one that deserves the increasing media attention it is receiving.

Students are told, instructed, prompted, cajoled, and enticed to believe that a college education set one on the road to economic prosperity in these United States; however, what they are often not told from the outset is of the great danger that their American dreams will be tossed overboard in a sea of student loan debt.

buried in debt 5

And how, exactly, might student loan debt affect one’s future economic aspirations and stability? A November 01, 2018, study published by two organizations, Summer and Student Debt Crisis, offer some answers to that very question.

The study, Buried in Debt: A National Research Study on the State of Student Loan Borrowers in 2018, includes responses to 32 online survey items from 7,095 individuals with student loan debt residing across the United States. Respondents identified themselves as primarily white (73.6%) or Black/African American (16.5%); as mostly females (71.6%); with either bachelors (31.7%) or masters (38.5%) degrees, and predominately ages 30 to 49 (62.8%).

buried in debt 2

The organizations administering the survey, Summer and Student Debt Crisis, describe themselves as follows in the survey report:

Student Debt Crisis is a non-profit organization dedicated to reforming student debt and higher education loan policies. Student Debt Crisis works with borrowers to understand their repayment obstacles and frustrations, and has realized national prominence for its efforts to represent borrowers on debt resolution solutions through petitions, awareness campaigns, and working with lawmakers.

Summer is a social impact start-up focused on helping millions of student loan borrowers successfully navigate the complex repayment process. Founded in partnership with Yale University in 2017, Summer’s software helps borrowers track their loans in one place and uses an innovative recommendation engine to
enroll them in the best repayment plan that maximizes their savings.

As to some additional details on survey participants, methodology, and analysis gleaned from my October 31, 2018, email exchange with Cody Hounanian of Student Debt Crisis:

Survey Methodology

The primary objectives of this research survey are to better understand how student debt impacts borrowers across a variety of domains and to collect feedback on their repayment experiences. The 32-question survey was distributed online to a database of self-reported student loan borrowers and resulted in 7,305 responses collected between October 9, 2018 and October 24, 2018. The database includes approximately 900,000 borrowers, implying an email response rate of 0.81% with an 85% survey completion rate. All respondents included in the report were confirmed to have at least one student loan borrowed in the United States that is currently in repayment, forbearance or deferment, or default. Removing respondents who did meet these criteria resulted in 7,095 respondents whose data served as the basis for the report.

Additional Information

The survey data correlates to many known statistics about student loan borrowers reported by the U.S. Department of Education. For instance, 18 percent of survey respondents reported being in default on at least one student loan, a number that matches the 18 percent of the population of total borrowers who are in default—representing 8 million of the total 44 million people with federal student loans.

About the Survey Authors and Administrators 

Will Sealy, previously a founding member of the student loan policy team at the Consumer Financial Protection Bureau, drafted the survey questions, analyzed the survey data, and drafted the summary report. Natalia Abrams, the Executive Director of Student Debt Crisis, administered the survey.

buried in debt 3

And now, to the report itself. From the intro:

Current student loan figures are startling: 44 million Americans are in
repayment for $1.5 trillion in outstanding student loans, a total debt size
that’s tripled since 2005. While the average debt load per borrower has
surged over the last two decades, the real wages of young graduates have
decreased by 2.5% since 2000––pushing many borrowers onto a financial
tightrope.

Making matters worse, an alarming number of student loan companies have been fined for illegal practices that add further to the hardship that borrowers face. The combination of these factors is pushing the system into crisis levels. Another borrower defaults on his or her loans every 28 seconds, joining eight million others already in default; and the consequences are severe, such as seized wages, which further drive the debt spiral.

While much of the news coverage remains focused on these skyrocketing debt statistics, there has been less coverage of the impact that these loans are having on the individuals who carry them. …

The research reveals a somber portrait of high monthly payments fueling high stress levels and low bank balances. Borrowers get little financial support from family members and even less assistance or flexibility from the lenders collecting payments.

buried in debt 4

Next, some sobering findings:

65% of student loan borrowers reported having less than $1,000 in their bank account.

The majority of borrowers reported having a high debt to income ratio. Across all survey respondents, the average total debt was $87,500, while the average annual income was $60,000.

Keep in mind that the majority of respondents are between 30 and 49 years old:

Student debt has prevented me from

  • Saving for retirement– 80%
  • Making large purchases– 59%
  • Buying a home– 56%
  • Buying a car– 42%

And ironically, given that a major purpose of attending college is to enhance one’s career opportunities, 39% reported being unable to achieve career goals due to their student loan debt.

As to the effect of student loan debt on one’s personal life:

86% said student debt is a major source of stress, of which 1 in 3 said it is the biggest source of stress in their life.

19% delayed getting married.

26% delayed having kids.

50% could not donate to charity.

13% failed a credit check for an apartment application.

Finally, what about the quality of loan servicing? Well, um:

Sloppy Loan Servicing

As borrowers experience the financial burden of student loan repayment, they also struggle with the confusing, unhelpful loan servicers that collect their monthly payments. Borrowers have difficulty finding which company to pay, finding accurate information about their loans, and getting helpful, trustworthy advice from loan servicers. Beyond that, loan servicers are failing to provide guidance for borrowers repaying their loans, as well as adding to their burden with unexpected fees, repayment plan inflexibility, and erroneous billing. …

57% reported experiencing an unexpected change to their loan servicer, where a new company requested payment without notice. …

59% experienced unclear guidance about their repayment situation and options from their loan servicer. …

25% of borrowers reported experiencing an unexpected fee charged to their account.

19% experienced their student loan company billing them the wrong amount

23% experienced receiving wrong information about their loans.

Student debt is crushing many Americans.

Student Debt Crisis is trying to help. The organization offers advocacy opportunities, student loan tools, and, of course, research like the study featured in this post. Also, Summer is currently available to advise 2018 college graduates regarding student loan debt.

Attending college should not be a debt nightmare.

Organizations like Student Debt Crisis and Summer are critical in bringing the nightmare to light.

buried in debt

__________________________________________________________________________________

Interested in scheduling Mercedes Schneider for a speaking engagement? Click here.

 

Want to read about the history of charter schools and vouchers?

School Choice: The End of Public Education? 

school choice cover  (Click image to enlarge)

Schneider is a southern Louisiana native, career teacher, trained researcher, and author of two other books: A Chronicle of Echoes: Who’s Who In the Implosion of American Public Education and Common Core Dilemma: Who Owns Our Schools?. You should buy these books. They’re great. No, really.

both books

Don’t care to buy from Amazon? Purchase my books from Powell’s City of Books instead.

3 Comments
  1. Jill Reifschneider permalink

    Thank you for the big DETAILED picture

  2. Christine Langhoff permalink

    Mercedes –

    My oldest daughter, who works for the Department of State, took a year’s assignment in Afghanistan, in part so she could pay down her student loans. Her living costs of housing and food were covered and she received a differential for serving in a war zone. She’s home safely, but ten years after graduation, still has a good chunk of money to pay off. She received scholarships covering half of her tuition, worked during the school year and summers. We helped as we could, but had twins four years behind her. Even refinancing her loans still left her behind the 8 ball.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: