Politicians, economists and educators have all weighed in on the challenges posed by student loan debt, but a new survey by TD Bank puts the burden into perspective, showing the average consumer spends more than 20% of their income paying back student loans.
To understand how student loans impact consumers, the financial services company asked 1001 adults between the ages of 18 and 39 how student loan debt has impacted their lives. All respondents to the survey were either currently repaying back student loans or had finished paying them off.
Many reported that student loan debt was impacting their quality of life, causing them to delay major life milestones and putting a damper on their financial health.
Survey respondents had, on average, $26,495 in student loan debt, and they paid an average of $579 on those loans each month. The average monthly take-home pay among the respondents was $2,689, which means the typical respondent spent more than one-fifth of their take-home income paying down their student loans.
With so much money going toward student loan debt, respondents have naturally had to pull money from other areas of their lives. For example, 35% of respondents said they dine out less frequently than they would like, while more than half — 60% — said they don’t take vacations because of their student loan debt.
In some cases, student loan debt may even be affecting consumers’ health: Among respondents, 20% blamed their student loan debt for their failure to join a gym.
Similarly, it may be affecting their financial health too: 20% of respondents said student loan debt is keeping them from saving any money, and approximately 54% said they had maxed out lines of credit because of their student loans.
Among millennials, 41% have put off making contributions to a 401(k) plan, 43% have delayed building an emergency fund, and 42% have decided against making other investments because of student loans. More than one third — 36% — of millennials said student loans have caused them to delay buying a home, which can be a way for many young people to start building wealth.
The burden is so real that many consumers also put off major life events because they don’t feel financially secure. Approximately 21% of millennial respondents said they had delayed getting married — not because they couldn’t find a partner, but rather because they had student loans to deal with. Twenty-six percent said they had put off having children because of student loan debt.
The best time to start thinking about how you’re going to pay back student loans is before you take them out in the first place. If your education is in front of you, make sure you understand all of your financial aid options.
For example, focus on getting grants and scholarships which don’t have to be paid back, maybe using a scholarship search engine such as Fastweb. And don’t forget that federal student loans have many ways to help your repayment, including income-driven repayment and student loan forgiveness programs.
If you’ve already incurred student loan debt, let others’ debt repayment success stories inspire you and give you tips you can apply to your own situation.