25 Shocking Facts About Student Loan Debt That Will Make You Reconsider Higher Education

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With the cost of higher education on the rise, students increasingly have to resort to taking out student loans. Higher education can be a great way to secure a prosperous future; therefore, students should look at student loans as a form of investment in their future. These are 25 shocking facts about student loan debt that will make you reconsider higher education:

Americans Owe Over $1.7 Trillion in Student Loan Debt

Millions of American citizens have had to take out loans to achieve their goals of attaining a college degree. The total amount of debt these individuals owe in federal and private student loans is over $1.7 trillion. This highlights how expensive higher education is in the country and how the costs can amount to large sums of consumer debt.

Student Loan Debt Prevents Major Purchases

Many individuals who carry student loan debt in adulthood avoid making large purchases like buying a home or a car because of their debt status. While this may be fine for renters who use public transportation for commuting, it can be difficult for individuals who want to become homeowners and invest in their real estate.

One in Four Adults Under 40 has Student Loan Debt

It may be concerning to learn that many people carry their student loan debt until age 40, with many adults under this age needing help to clear their student debt. While this ratio decreases with the increase in age, young people who don’t want to carry debt for nearly twenty years may not want to go to college if they have to take out a loan. However, there are ways to properly navigate your finances when you have a loan to help you clear off your loan as early as possible.

Student Loan Debt Limits Consumer Spending

A large amount of student debt within a population can negatively impact the economy, as consumers are likely to spend less and refrain from making unnecessary purchases with debt over their heads. People who want to ensure that they restrict their spending only to necessary purchases and expenses may not be swayed by this fact and may find that attending college for higher education is the right decision for them.

Over 42 Million People have Student Loan Debt

Over 42 million Americans have student loan debt. This highlights how difficult it is for residents of the country to afford higher education without financial aid in the form of a loan. Several million of these people have carried student loan debt for several decades because of the high amounts of money they owe.

The Number of Entrepreneurs has Decreased with the Rise of Student Debt

An increase in student debt has been found to result in a lower number of new small businesses emerging. This debt has also resulted in a decline in the number of new entrepreneurs between the ages of 20 and 34. If your future plans include becoming an entrepreneur and owning your own business, you may want to reconsider higher education, especially if you have to take out a student loan.

Student Loan Debt Impacts Access to Business Loans

Lenders look at your debt-to-income ratio before approving a loan. With a student loan already in your name, you will be required to make monthly payments towards your student debt, lowering the funds you have left to invest in your business venture. Individuals who want to own their businesses may want to get straight into the business without higher education.

Student Loan Debt Can Increase Struggles Amid Economic Downturn

Students with student debt tend to find it more challenging to keep up with payments and bills, especially during economic downturns. During these moments, costs are on the rise, and with a student loan debt, your ability to contribute to emergency funds can be limited or nonexistent. This can be even more difficult if you lose your job or face unexpected bills.

Saving for Retirement is More Difficult with Student Debt

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f you plan on building a retirement savings fund or account at a young age, your ability to carry student loan debt may be restricted. This is because you must continue making monthly student debt payments, inhibiting your ability to contribute to a retirement account. People with student loan debt often find that they need more retirement savings.

Students are Disempowered because of Their Debt

Many students who have student loan debt feel disempowered because the debt limits their financial and life choices. Some feel forced to make decisions that they are unhappy with to afford higher education and often end up making many sacrifices that limit their college experience.

Taking on a Student Loan can Help You Earn More

Research shows that individuals with college degrees have higher earnings than many people who don’t have a college degree. The higher your educational level, the more you will likely be able to earn during your career. Many people who are dissuaded from higher education because they do not have the funds to cover the costs find that taking on a student loan can be an excellent way to build a more secure future for themselves.

Student Loan Debt Can be Forgiven

Unlike other kinds of loans, federal student loan debt has the potential to be forgiven thanks to the many forgiveness programs in the country. However, there are many criteria that you will have to meet in order to qualify for these programs, and it is also important to remember that not all student loan debt is forgiven. If you plan on making a career in service to the government or other qualifying occupations, attaining a higher education under a student loan may increase your chances of having your loan forgiven.

Interest Rates for Student Loans Can be Astronomical

Depending on the student loan you are looking at, you may find different interest rates from federal loans and private lenders. Sometimes, the interest rates can go over 7%, which can significantly increase the overall cost of the loan. These high interest rates have led many individuals to reconsider their decisions to finance their higher education through loans.

Student Loan Debt Can Help You Build Credit

Student loan debt requires monthly payments towards your debt, which can help you build a good credit score. This, in turn, can be very beneficial if you are looking to take out a mortgage or any other loan in the future because good credit scores get better deals on their loans regarding their interest rates, additional fees, etc.

Student Loan Debt Has Outpaced Credit Card Debt

In recent decades, the amount of student loan debt in the US has far exceeded that of credit card debt. This trend was reversed in the 1990s when people carried more credit card debt. This highlights how expensive student loans can be and why many people reconsider acquiring a higher education.

 Many Borrowers can’t Pay Their Loans

Many people with student loan debt find it very difficult to pay off their debt in a short amount of time. About 40% of borrowers can take over twenty years to completely pay off their debt, even with consistent and timely payments. This shocking fact may lead many young people to reconsider their decision to acquire a higher education, as the longer they carry debt, the higher their chances of having financial struggles.

Interest Rates can Compound During Your Loan Duration

Many borrowers take decades to repay their student loans. This is because of the compounding effect of the interest on their loan. This causes the repayment amounts to grow over time. People who want to acquire a higher education should reconsider doing so because of the financial stress that student loans can cause.

Defaulting on Student Loans Has Severe Consequences

A major problem that borrowers may need help with when taking out a student loan is their inability to clear off the loan or to meet repayments on time, which can lead to defaulting. Defaulting on federal student loans can have severe consequences, including wage garnishment, loss of tax refunds, a damaged credit score, etc.

Student Loan Debt Can Cause Bankruptcy

Bankruptcy due to large student loan debts is especially common among individuals between 25 and 40. While student loans are often non-dischargeable in bankruptcy, many individuals still find themselves filing for bankruptcy because of these loans. This is a concerning trend that is emerging and becoming more common, which can cause you to reconsider higher education.

Many Graduate Students are in Debt Too

Many young students are enticed by the promise of a secure future offered after higher education and, therefore, continue with higher education for master’s and doctoral degrees. However, many graduate students also tend to accumulate large amounts of debt. These programs tend also to be more expensive, which means that these loans can be much for financially crippling.

Student Debt Disproportionately Affects Minority Groups

Often, student loan debts affect students of color much more than white borrowers. These individuals experience more financial difficulties, which increase when they take on hefty student loans to fund their higher education. Many individuals who belong to these minority groups are swayed against higher education because they are worried about the extent of the financial challenges they may face with student debt.

Student Loan Debt Can Affect Your Mental Health

One of the many drawbacks of student loan debt is its effect on an individual’s mental health. Research has shown that people who have large amounts of debt tend to have higher levels of anxiety, depression, and other kinds of mental health issues that are caused by the range of financial issues they face.

Unpaid Debt Continues Growing

People who leave their student loan debt unpaid for long periods of time find that they continue to accrue interest, which can be very risky if interest rates exponentially grow with unpaid debt. This can easily lead to further financial struggles, which have affected many individuals. It is important to have a robust repayment strategy if you take out a student loan to avoid falling into financial despair.

The Student Loan System is Complex

Individuals who borrow student loans are usually younger people who may need a proper grasp of how these loans function and what they can lead to in terms of their future. The inability to navigate this system can easily lead to bad financial decisions, which causes additional financial stress for many people.

Many People Carry Student Loan Debt for a Lifetime

While many people clear their student loan debt before retirement, many still find that they carry their student loan debt throughout their lifetime. This can be due to poor financial decisions, unpaid debt payments, or other financial issues. People who are afraid of carrying debt their whole lives are reconsidering higher education to ensure that they are not bound to their financial decisions for their whole lives.

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