While a college degree may give graduates a leg up in their careers, students who graduate with high student loan debt can find that ticket to be a costly one.
According to a study by the public policy research organization Demos, student loan debt may be more detrimental to your financial future than was previously thought.
The research found that students who graduate with debt wind up with significantly less wealth in the long term than those who didn’t. In fact, the researchers estimated that a combined $53,000 in student loan debt would result in a loss of $208,000 for a dual-headed household over its lifetime, since they’d have less to save and invest while trying to pay down their student loans.
I believe it because I talk to clients between the ages of 25 and 35 every day. My goal is to help them create a financial plan so they can build financial security. The building blocks are a financial freedom (or emergency) fund, being debt-free within three years and getting on track for basic retirement income replacement.
College graduates with the average $27,000 in student loan debt can end up making payments of over $300 a month for 10 long years. There are only so many dollars to go around, and because of the student loan burden, these are people who have difficulty carving out funds to save, pay down debt and invest for retirement. They may have to delay purchasing a home because they are paying up to 15% of their incomes for the college degree that landed them the job.
How can you graduate without debt? In today’s world that may be rare, but at least students can reduce the debt they incur and, while they are in college, take advantage of the career opportunities their colleges offer. In short, college students today need to minimize expenses and maximize value.
Read the full Demos report: At What Cost? How Student Debt Reduces Lifetime Wealth