Majority of Millennials Have 'No Idea' When Student Loans Will Be Paid Off

[Purveyor]

More than a third of millennials say they wouldn't have attended college at all had they known the extent of the costs in advance.

ByPolly Mosendz
April 7, 2016 — 9:13 AM EDT

The path to freedom from student debt is a long, winding, and arduous one with no end in sight for millennials. A new survey conducted online in February by research agency TNS on behalf of Citizens Bank found 59 percent of those polled have "no idea" when they will be able to pay back their student debt.

The survey found millennials, defined as those between the ages of 18 and 35, have an average student debt of $41,286.60. That's significantly higher than the national average amount of debt for college graduates, which the Department of Education determined is $29,400. Not every millennial knew how much debt he or she carries: 15 percent of those polled by TNS said they weren't sure what their student loan balance was, and more than a third didn't know what the interest rate is on this debt.

Those polled also had a limited understanding of the intricacies of their student debt. Almost half said they "don't understand" how privatized student loans work, and 44 percent said they don't entirely grasp the difference between federal and private student loans. About a third had never even heard of student debt refinancing.

The millennials who are paying down their burdensome debt are cutting down on eating out, entertainment, and vacations to do so, the survey found. Eight percent said they don't plan to pay back the debt at all, while another 8 percent hope to defer the loan payments by going back to school.

The majority of millennials said they regret taking out as many loans as they did, but a third took it a step further, saying they wouldn't have attended college at all had they known the extent of the costs in advance.

more...

http://www.bloomberg.com/news/articles/2016-04-07/majority-of-millennials-have-no-idea-when-student-loans-will-be-paid-off

[LisaM]

1. I wish these articles would break this down a little more.

Do the amounts include grad school? What are they majoring in? What is the average starting salary of the millennials with this debt, and what's the unemployment (or underemployment) rate of people carrying this debt?

Obviously this level of debt is burdensome, but I think this type of report would be far more useful if we understood the capacity of the graduates to pay it back (starting salary of $120,000+ at a tech company, or unable to find relevant employment?)

[Igel]

3. It doesn't suit the rhetorical purpose.

Every breakdown I've seen has the average yanked up by grad school in either professional fields (doctor, legal, dental) or things like art history contributing a great deal. Then there are Ivy League schools with large price tags, 6-year BAs, and insane loans taken out to cover either internships or lifestyle choices.

The loan holders admit they had no idea how it worked. However, they're given the information and many think of it as free money. They're told to read and sign, and sign because all that stands between them and $6000 in stipend cash is their signature. They were told the consequences. They enjoyed the rights and now want the consequences they agreed to rescinded.

This isn't to say that many simply misjudged as we entered a recession. But I've known far too many seniors who said that they'd like having their own apartment and the first thing they'd do with their cash is buy new clothes. They wanted to go somewhere trendy, not because it offered a good degree or because they had somebody in particular they wanted to work with.

Nobody's there to temper their foolishness or desires. Their parents haven't, schools can't, society won't, and the lenders have no reason to be self-disciplined when the government backs the loans and pays the interest, the schools do the calculations, and the students sign.

In fact, for a while (perhaps even now) a lot of schools went with a high-fee/high-financial aid model. The lower-SES students would get grants, those in the upper portions of the middle class would get loans, and the upper class would get high fees. The result would be money that the schools could funnel into grants for the lowest SES students, and those who could pay (those in the upper 50, 60%) would be subject to a kind of fee-based tax to help subsidize them. (I thought this idiocy in the '90s. I was vastly outnumbered and out-decibeled by people far to the left of myself.)

[Avalon Sparks]

7. I wrote a response further in this thread.

I didn't want to spam it all over the thread. Just letting you know if you want to comment.

You gave a lot of thought in your post, and I read it and considered it. It seems one of the points you question is what degree path people choose. I wanted you to share my story and also suggest that it's not important what the breakdown of the debt stats are, and it's also not of real relevancy what degree paths students are choosing.

It's just simply that it is absurd that college costs are this inflated and that is the real problem.

[Avalon Sparks]

6. Please see my response to this message as well -

Further done in this thread.

[redstateblues]

2. Why would someone borrow $40,000+ to get a BA in English Lit?

or any other degree that is virtually worthless in the market place. My BA in Sociology would certainly fall into that category and thanks to a parent that saved and sacrificed, in addition to me working part time, I graduated with no debt. I have made some bad financial decisions in my life and have paid dearly-I probably learned more from that than I did from four years of college. There a TV financial person that calls it stupid tax.

[LisaM]

4. First, sociology degrees SHOULD be valuable in the marketplace, IMO

Liberal arts majors are generally an asset to a workforce if the company they work for uses them correctly.

But if someone graduates with the stated debt, but then goes to work at Amazon, where the starting salary can be north of $110,000 (obviously not for all jobs, but that was a number I read recently in Seattle), then they should be able to repay it within a few years, barring some extraordinary circumstance.

That's why I wish there was some more quantification here.

[Avalon Sparks]

5. I'll tell you why - it's real simple

Because having a college degree virtually guarantees an individual will make a significantly more money through the course of their lifetime. Having a degree is much more likely a person in the door. Having a college degree is almost always a requirement listed in a job posting that pays a living wage. That is why.

I majored in Recreation Therapy and received a BS in Recreation Administration in 1989 from a Texas State school.

I'm sure an English Lit degree would have been a bit more distinguished.

Within 10 years of graduating I was making 60K a year. Never did use that Recreation Degree by the way, I moved to a big city and hit the office temp scene for a few years, working at over 80 companies in Dallas during that time. I made connections at these companies, and doors opened. Doors that all required a college degree - it didn't matter what it was in, only that I had one.

So why question an English Lit degree vs: whatever else? MOST people I knew did not make a great salary straight out of college, regardless of what they majored in and none by the way graduated with debt, including myself.

I paid for almost 100% of my tuition and books. All 5 years.

15 hours tuition was $350-400 a semester the whole time I was there. Books each semester were around $100 each semester - about a grand a year.

I worked part time for min wage of $3.65/hr during the summer to pay for each year. That's right - PART TIME. Parents chipped in a couple of hundred bucks and paid for my apartment and food during the semester. I knew kids that worked full time at min wage to pay for tuition/books and part time during the school year. Some took out a little financial aid at the beginning of semester, and paid it back before the following semester.

I checked what 15 hours/semester costs at the same Texas school in 2016. It's $5000 just for the semester.
To pay for just tuition working part time in the summer at min wage, it would have to be $36.50 an hour. That is the reality.

In 26 years, tuition has increased 1000% at the college I attended since 1989.
It used to be possible to pay for it making minimum wage.

Why that is not possible anymore is the only question we all should be asking.

Not questioning how much some stat is weighted over whether advanced degrees are included. Not trying to claim people aren't majoring in the right degree. Why? To look for some slither of justification of how it's the STUDENT's fault.

These young people should not be saddled with that load of debt for trying to make something of themselves. IT's like some jacked-up form of indentured servitude. It's appalling and wrong on so many levels.

An educated country is a strong country and I want these young people out there spending money when they get out. The one rare thing that almost every economist agrees on is that Demand is what grows the economy.

And finally I'll close with this.

At this point in my career 25 years out of college, I'm making in the low three figures. Without a college degree that would not have been possible. My final landing position and where I'm at now does not accept anyone that doesn't have a degree, period.

The projects I worked on to get that degree, the skills I acquired to stand and speak up in front of a group people during my internships and fieldworks, the papers I had to write, and even the Recreation Newsletter I had to create at one fieldwork..... all those things and more that I don't want to bore you with, helped me at some point in my career and to get me where I am now.

It is criminal what has happened with the cost of college education - every single person in this country should be demanding that things change.