Student loans are easy to get, but hard to understand, and even harder to repay.
Student loan debt in the United States adds up to more than $1.5 trillion – making it the second highest consumer debt in the U.S. behind mortgages. The average debt for a college graduate adds up to about $37,000.
One reason college graduates continue to fall further into debt may be how little they educate themselves on the loans they’re taking out. A Prudential study found that 25 percent of students don’t know the difference between private and federal loans, which can make a huge difference in the amount of interest the borrower needs to pay back and what payment plans are available. 
And as college education gets more expensive, wages seem almost stagnate. The average cost for a four-year degree is $104,480, according to Forbes.  That’s risen from $52,892 (after inflation) for a four-year degree in 1989. Wages, however, have only grown from $54,042 to $59,039 between 1989 and 2016.
Here’s how the student debt crisis is affecting everyone’s lives – from students to parents to employers.
Students don’t know enough about their loans
A college student can ace every math class without having a clue how they’re paying for them.
Many don’t understand what they’re signing up for when they’re 18, and they still don’t understand years later when they graduate. Participants in a study by New America said they felt led on or pressured by student financial aid offices to take out a loan, without considering they might not get a job in that field when they graduate – or that they may not graduate at all. 
One borrower quoted in the study said she didn’t realize that the interest began building up while she was still going to school. (This is only true for unsubsidized student loans, which is why you should always take the full subsidized amount available first.) Five years later, she was shocked at how much she owed.
Several others said they didn’t know they would still be charged for the degree if they dropped out or didn’t finish college. Despite mandatory “entrance counseling” for student loans, many students don’t understand the most fundamental things about them.
Crushed by student loan debt and worried you’ll never pay it off? There is help available.
Parents are stuck with their kids’ debt
Parents aren’t just helping their kids cover the cost of college before they attend, but after they graduate as well.
Thirty-six percent of parents expect to pay some or all of their child’s student loans, according to a College Ave Student Loans survey.  Even as parents serve as student loan cosigners for their children.
Thirty-nine percent of parents say paying back student loans is more stressful than managing mortgage payments, according to the survey. Even more, 32 percent say paying for college causes more strain than paying for credit cards.
While you might feel obligated to help your child pay their student loan debt – especially if keeping your credit score up is a motivating factor – you might want to think about what that money would’ve gone to instead, like your retirement.
Most people don’t know how much they’ll need for retirement and expect to work long into their golden years. The more money you’re putting toward your child’s education – before or after they graduate – the less you’re contributing to yourself. This means you’re going to work longer.
Luckily, there are a few steps to take to make sure you’re able to help your kid and yourself at the same time, like:
- Budget for both. Review how much your child will earn – even conservatively – and make sure they contribute to the costs. You can adjust your retirement contributions a little, if necessary, but try to find other places to cut corners instead.
- Set deadlines. After graduation, make sure your grown kid is paying on time. Even if they are paying you, it helps everyone involved if they don’t fall behind. It’ll also teach them responsibility when other bills are due, and that creditors aren’t as friendly as parents.
- Make repayment a plan. Paying back student loans can be stressful. Regardless of how you help your child pay back student loans, make sure you have a plan in place so you aren’t punishing yourself later on in life.
Americans put their lives on hold for student loans
Go to college. Start a career. Get married. Have kids. Retire to the Florida Keys.
That’s the future most Americans envision for themselves. But with college loans so high, that timeline has new steps – like “move back in with parents” and “work two jobs.”
Students around the country are realizing they may need to work a little harder to achieve their version of the American dream. According to a study conducted by the American Institute of CPAs, 8 in 10 adults have said loan payments required them to sacrifice financially or personally.  These concessions include…
- Delaying the start of retirement accounts (50 percent)
- Living with roommates (40 percent)
- Postponing marriage (20 percent)
- Putting off having children (19 percent)
Education expenses are making many young Americans delay traditional milestones like marriage and children until later on in life, according to the American Student Assistance, a non-profit that helps college students manage their loans. 
The average age to get married has gone up over the past few decades. In 1965, the average age for men to get married was 23, and 21 for women. The average age now has gone up to 29 for men, and 27 for women.
It’s not easy getting married and having kids when you’re starting $37,000 in the hole. In fact, the highest student loan balances are among consumers in their 30s, according to a 2019 report from credit bureau Experian. 
Overall, 35-year-olds hold an average $42,564 student loan balance. That’s followed by 34-year-olds with $42,316.
With the huge amount of debt we already need to pay back, we’re also reluctant to take out mortgages at the start of our careers.
Whether college graduates are currently paying their student debt back or have already paid it off, they’re still struggling to move up to their own homes. Many are living in situations they don’t want to. Of the people in Prudential’s study, 35 percent say they’re living with a roommate or family member rather than living on their own.
Student loans are affecting our careers
Students take out loans as an investment for their career, but a new study from EdAssist, a company that provides student loan repayment software, shows they’re doing the opposite. 
Thirty-seven percent have said they were made to give up their dream careers completely due to loans. If not for debt…
- 18 percent would want to be social workers
- 19 percent would want to be doctors
- 22 percent want to be entrepreneurs
- 23 percent would want to be teachers
Student loans are effectively keeping people from making the world a better place.
“Rather than opening up pathways to success, in some cases, these big education bills are having the reverse effect,” says Chris Duchesne, EdAssist VP. “The amount of student debt people are carrying is costing them in dreams and ambition, and potentially costing employers in creativity, innovation, and the next big idea.”
Student debt hurts women more than men
According to the American Association of University Women (AAUW), ladies hold nearly two-thirds of the outstanding student loan debt in the country.  As more women are enrolled in college and they continue to earn less than their male peers for the same job, student loans disproportionately affect women more than men.
The AAUW study shows that the increase in women in higher education is on par with the increase in student loan debt.
“The number of women enrolled in postsecondary institutions has increased dramatically within the past 50 years, and during that same period there has been a dramatic increase in the amount of student debt amassed by the students enrolled in college,” the study says. “Women have achieved equity in postsecondary attainment at the exact moment it became commonplace for college students to amass large amounts of debt.”
According to AAUW, women are borrowing more. In 2012, women getting bachelor’s degrees were borrowing nearly $21,000 while their male counterparts were borrowing just over $19,000. As a whole, expected family contributions are less for women than they are for men: $7,529 versus $8,888. Women get less help from families even though they make up the majority of enrolled students nationally (in both graduate and undergraduate levels).
“Women have taken on more debt than men for more than a decade, and do so regardless of degree level,” the study says.
Women have less family help, take out more in loans, earn less while working in college and after graduation, and take longer to pay back loans once in the workforce.
If you’re stuck in the student debt crisis and are having trouble paying, check out Debt.com’s guide to getting out of student loan debt.
Published by Debt.com, LLC