Majority of borrowers say federal student loan debt is not worth it
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Nearly one third of undergraduates borrow money from the federal government to pay for college.This is a shocking sum of approximately 43 million Americans that owe an incredible total nearly $1.6 trillion in outstanding student loans.
New research found 54% of federal student loan borrowers thought it was unnecessary to take on the debt. The CNBC + Acorns survey found that 44% thought it was worthwhile to take on the debt. Invest in you Momentive has partnered to conduct a Student Loan Survey. (The poll was completed online between Jan. 10-13 with a nationwide sample of 5,162 adults.
Many Gen Xers and millennials are more cautious. Respondents aged 35-44 said that it wasn’t worth taking out federal student loans, given their circumstances.
Borrowers of federal student loans average $36,510.
Kate Bernyk is 39 years old and graduated graduate school with two communication degrees, about $100,000 of student debt, and almost fifteen years ago.
Kate Bernyk is 39 years old and graduated with two communications degrees. She also owes about $100,000.
CNBC | Andy Tenke
Bernyk is a senior communications specialist based in New York. “I used be proud of my master’s degree. But now, it feels foolish.” “It feels like maybe I shouldn’t have gone because it’s really hard to put a price on what the advantage has been versus the disadvantage of getting into debt.”
Her student loan balance is still over $30,000
Earning a bachelor’s degree is a good thing. a median of $2.8 million during their career — 75% more than if they had only a high school diploma — although when broken down by gender, women with a BA have median lifetime earnings of $2.4 million, compared to $3.3 million for men.
End of loan repayment suspension
When the Covid-19 pandemic struck in March 2020, federal loan payments were suspended for borrowers. The relief granted in March 2020 by the Covid-19 pandemic was five times extended and now expires on May 5. According to the survey, many borrowers have been able to borrow more money in order pay their debts (48%) or for day-to-day expenses (35%).
However, borrowers who were surveyed stated that they will have to defer other financial goals such as investing in money (40%) and saving for retirement (38%), when their federal loan payments resume.
Source: CNBC + Acorns Investment in You Student Loan Survey. Momentive
Bernyk described it as “a mortgage that doesn’t have a house at the end.”
Kristen Broady is an economist who supports student loan forgiveness. This could be a reason why they are insisting for more.
Broady at Brookings Institution said, “if people don’t have to return that money”, that’s more money they can use for durable and non-durable products or services. This money is directly invested in the economy.
Learn more Invest in You:
Most Americans want Biden to prioritize student loan forgiveness, survey says
Student loan holders are more likely to be women and people of color
81% of adults with student loans say they’ve had to delay key life milestones
A majority (57%) of those surveyed said that President Joe Biden should prioritise student loan forgiveness. But, views differ as to how.
A third said that all student debt should go. Nearly the same number said they should forgive only needy students’ loans, and one-fourth said no.
Each dollar that they borrow will cost them 2 dollars when they are done repaying the debt. They do not think about it.
Mark Kantrowitz
Financial aid expert
Biden supported a plan to cancel $10,000 student loan debt. Some Democratic lawmakers including Senator Elizabeth Warren, D.Mass. and Majority leader Charles Schumer D.N.Y. are calling upon the President to cancel student loans up to $50,000.
Rep. Virginia Foxx (R-N.C.), the House Education and Labor Committee’s top Republican, stated that blanket loan forgiveness was a “massive error”. — and the extension of the student loan pause has already cost taxpayers over $150 billion.
Too many things to think about
Denisse Quintanilla is a CNBC intern. She plans to finish her degree in May. Once she has to start making the payments, it is not clear what her terms will be.
Quintanilla stated, “It is still overwhelming to consider how much I should pay each month to avoid being in my 30s/early 40s with student loan debt.”
Financial aid expert Mark Kantrowitz said that while students might receive counselling when they borrow money for the first time, it is often not enough.
He said that every dollar borrowed will cost the borrower two dollars when they pay off the debt.
Bernyk worked for 10+ years in government and non-profit organizations. She has been able to take a lot time to consider and work on her student debt. Perhaps she found a way to reach the end.
In order to be eligible for forgiveness of public service loans, requirements were eased by the Biden Administration last autumn. Bernyk stated that she has been working closely with her loan agent to be eligible under the federal program and have all her outstanding loan debts forgiven. The new rules are in effect until Oct. 31, 2022.
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