BOSTON--(BUSINESS WIRE)--Student loan debt is having a profound impact on the daily lives and spending habits of young Americans, regardless of the type of institution they attended or the level of credential they earned, according to a new report from American Student Assistance®. ASA® is a private nonprofit dedicated to eliminating finance as a barrier to education.
“There is no doubt that higher education is still one of the best investments that people can make in their future,” said John Zurick, ASA executive vice president. “However, while the intrinsic value of post-secondary education is still apparent, there are downsides if a more highly educated generation becomes a more indebted one.”
According to ASA’s Life Delayed survey, 62% of respondents said their student debt posed a hardship on their personal budget when combined with all other household spending. Specifically, 35% of respondents said they found it difficult to buy daily necessities because of their student loans; 52% said their debt affected their ability to make larger purchases such as a car; 62% said they have put off saving for retirement or other investments; and 55% indicated that student loan debt affected their decision or ability to purchase a home.
ASA issued the first Life Delayed survey in 2013. This year’s report, which gathered information from student loan borrowers who have graduated or separated from school, analyzes responses not only in the aggregate but also by school type and credential earned. Results are provided for borrowers who attended community college, four-year public and four-year private school for undergraduate study, as well as for graduate borrowers and those with professional degrees like law school and medical school degrees. Borrowers responding to the survey were not affiliated with American Student Assistance or the organization’s SALT® consumer literacy program.
While recent data have pointed to student debt as being a crisis for only certain portions of the student population, such as those who attend for-profit institutions, large swaths of Life Delayed respondents from all institution types reported having difficulty with their debt. Community college students faced the biggest challenge, with 49% saying it is difficult or very difficult to make student loan payments, while 48% of private institution borrowers and 40% of public school borrowers said they faced similar challenges. Forty-three percent of graduate school borrowers said they find it difficult to pay student loans each month.
Across all institution types, a majority or near-majority of undergraduate borrowers said their student debt has impacted their ability to put savings aside for an emergency fund or for retirement. Similarly, 41% of graduate borrowers said they do not have any emergency savings, and 61% of graduate school borrowers say that student debt has impacted their ability to save for retirement. A majority of borrowers, both undergraduate and graduate, said they were either unsure they would have made the same choice or definitively would not have made the same choice to attend their alma mater, if they knew then what they know now about loan repayment.
Life Delayed puts forth a number solutions to boost the long-term financial success of students, from controlling college costs and expanding grant aid to keep borrowing levels low, to lowering interest rates so that the government doesn’t profit off of student loans, to expanding financial education for students and alumni. In the survey, undergraduate and graduate borrowers across all school types overwhelmingly supported additional financial education and counseling before, during and after the college experience.
“A globally competitive United States depends on an educated workforce,” said Zurick, “so our society must continue to encourage the pursuit of education for all Americans. Unless and until there is a seismic shift in the way higher education is funded at both the state and federal level, however, we must find a way to ensure that borrowers have better means of managing education debt so they can unlock the full economic benefit of their college credential and not jeopardize their future financial security.”
About American Student Assistance & SALT:
American Student Assistance (asa.org) is a private nonprofit dedicated to helping people make better decisions about financing higher education and repaying student loans, so they can become confident, financially competent consumers. After working with millions of student borrowers, American Student Assistance combined 50+ years of knowledge and best practices into a powerful consumer literacy program called SALT®. Working with more than 300 higher education institutions, nonprofits, and corporations nationwide, SALT (saltmoney.org) provides the tools and resources students need to better understand how to pay for and pay back college costs.
American Student Assistance, ASA, SALT, Money Knowledge for College—and Beyond, and corresponding logos are trademarks or registered trademarks of American Student Assistance. ©2015 American Student Assistance. All rights reserved.