Student loan debt has ballooned to more than $1 trillion dollars, and many overwhelmed borrowers are being forced to put off significant life events as a result of their large balances.
New findings released by the American Institute of CPAs indicate that young adults who are saddled with heavy student loan debt are choosing to focus on paying down balances before taking on other responsibilities, including building a savings fund or getting married. While 39 percent of respondents said they fully understood the heavy burden their student loan balances would have on the future, 60 percent now regret their choice of educational financing. Another 75 percent said they have made a personal or financial sacrifice as a result of their monthly payment obligations.
For example, 41 percent have delayed contributing to a retirement fund, and 31 percent have worked a second job in order to meet their day-to-day needs and keep up on payments. Twenty-nine percent of respondents said they have avoided significant big-ticket purchases – namely homeownership – to devote more income toward their student loan balances. Another 15 percent said they have put getting married on hold until they are in a better financial position, and 16 percent have postponed having children.
A recent report from the Consumer Financial Protection Bureau corroborates this information, and the government watchdog noted that between 2007 and 2010, student loan debt for households increased 15 percent, and many younger consumers were shying away from forming new households. The data also reveals that in 2011, roughly 6 million individuals ages 25 to 34 lived with their parents as a result of heavy education balances, up from 4.7 million in 2007.
Overcoming student loan debt
Individuals carrying large student loans may have some options to help them better manage their balances. Those with several federal student loans may be able to consolidate their debt under one interest rate and make a single payment each month. This can not only make monthly payments more affordable, but also easier to manage. Consumers can also free up more income by sticking to a strict budget and avoiding other types of obligations, such as credit card debt and unnecessary loans.
Enrolling in credit counseling can also be useful for those who are struggling to make ends meet or those who are simply finding it difficult to improve other financial categories in their lives, such as building emergency, traditional or retirement savings.