A Financial Crisis – Student Loan Debt

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Americans are drowning in debt.

Credit cards, auto loans, personal loans and student loans: Debt balances continue to grow, yet payroll gains and low unemployment rates are masking the trend. 

As the latest round of college graduates replace their caps and gowns for a job search, they are most likely entering the workforce saddled with tens of thousands of dollars in student loan debt.  And, as the cost of college has increased, so has the reliance on student loans to fund a college education. 

In the United States, more than 44 million Americans have outstanding student loan debt totaling more than $1.6 trillion.

93% of college attendees/graduates surveyed think this represents a financial crisis.

Two-thirds (67%) of respondents said the cost of their college education has caused them to feel overwhelmed about their financial situation. Forty-seven percent said their college education cost has contributed to mental or emotional health issues (e.g., anxiety, depression), while 38% of respondents said the cost has caused them to lose sleep at night.

The Culture of Borrowing

  • 31% of respondents DO NOT believe they will be able to pay off their college education bills.
  • 63% of respondents said the cost of college impacted their decision on what school to attend.
  • 57% of respondents said they would NOT have been able to attend college without a student loan.
  • 54% of respondents said they feel that student loan debt should be forgiven by the federal government.

When asked which reforms for student loan debt they would be more likely to support, 63% said they would support expanding student loan forgiveness for public service (e.g., teachers, government employees, first responders, military service). Fifty-four percent said they would support free or subsidized tuition for low-income households. Fifty-three percent said they would support tax breaks for companies that offer student-loan repayment programs.

Financial Stress is Real

We asked college attendees/graduates to rank which cost is the most stressful in their life. Not surprisingly, student loans topped the list.

1.       Student Loans

2.       Housing Costs (Mortgage/Rent)

3.       Credit Cards

4.       Everyday Expenses (Groceries, Utilities, etc.)

5.       Auto Loan/Expenses

6.       Medical Costs

When asked about the impact of debt, the answers were far ranging.

Sacrifices

Fifty-two percent of respondents said they would take a job even though the yearly salary was less than what they expected – if the company paid off their student debt. Twenty-seven percent said they would be willing to commit a maximum of five years to a company if they paid off their student loans, while 28% said they would be willing to commit more than five years.

Three in five (59%) respondents said they can’t save any money because of the cost of their college education. Forty-five percent said they can’t go on vacation, 43% said they can’t save for retirement and 32% said they are carrying credit card debt because of college costs. Forty-eight percent of respondents said they have been unable to pay off (or down), or have delayed paying off (or down), other types of debt because of the cost of college. Forty-seven percent have been unable to, or have delayed, contributing to everyday saving for emergencies. Forty-five percent have been unable to take a vacation or have delayed doing so because of college costs.

Fifty-seven percent of respondents believe their college education cost has impacted their credit score, and 43% believe their college education cost has impacted their retirement age.  Nearly half (49%) of respondents said the cost of their college education has impacted their choice of where to live, while 42% said it impacted their choice of careers or jobs and 36% said it impacted their retirement.

Bad Knowledge

Only 1 in 5 (19%) of college attendees/graduates surveyed said they took a finance course in high school. Less than half (48%) of college attendees/graduates surveyed know the correct description of a subsidized loan.

Less than half (43%) of college attendees/graduates surveyed know that Sallie Mae is a provider of government-sponsored student loans.

Dollars and Cents

Thirty percent of respondents said they expect to be able to pay off the cost of their college education in 2-5 years. 27% said they think it will take them between 6-10 years to pay off the cost.

Close to half (47%) the respondents said the amount they currently owe on the cost of their college education is $20,000 or more. Thirty-eight percent of respondents said they currently pay $100 or less per month to pay off the cost of their college education.

Cross Generational Impact

Eighty-nine percent of parents surveyed think the $1.6 trillion owed for student loans represents a financial crisis.

In fact, 37% of parents surveyed said their child’s college education cost has caused them to feel overwhelmed about their financial situation. Twenty percent of parents said their child’s college education cost has contributed to mental or emotional health issues (e.g., anxiety, depression) of their own. Finally, 20% of parents said their child’s college education cost has caused them to lose sleep at night.

Retirement on Hold

Forty percent of parents believe their child’s college education cost has impacted their retirement age, and 2 in 5 (41%) said the cost of their child’s college education has impacted their overall retirement plan. Parents are sacrificing quite a bit for their child’s college education, with 42% saying they had given up saving for retirement, 42% had given up going on vacation, and 31% had given up retiring when they initially desired. 

Parental Savings and Debt

A third of parents surveyed said they can’t save any money because of the cost of their child’s college education. Twenty-two percent said they are carrying credit card debt because of their child’s college costs, and 40% said they have been unable to pay off (or down), or have delayed paying off (or down), other types of debt because of what they are paying towards their child’s cost of college.

Forty percent have been unable to take a vacation, or delayed doing so; 38% have been unable to save for retirement, or have delayed doing so. Finally, 23% of parents believe their child’s college education cost has impacted their own credit scores.


When asked which reforms for student loan debt they would be more likely to support, 52% of parents said they would support expanding student loan forgiveness for public service (e.g., teachers, govt. employee, first responders, military service). Half said they would support tax breaks for companies that offer student loan repayment programs, and 42% would support free/subsidized tuition for low-income households. Less than half (46%) of parents surveyed know the correct description of a subsidized loan. Only 37% of parents surveyed know that Sallie Mae is a provider of government-sponsored student loans.

Doing Things Differently

While parents are taking on additional debt, and bearing emotional burdens tied to their children’s college education cost, overall, most wouldn’t do things differently. Only 2 in 5 (39%) of parents would have asked their child to apply for more scholarships. Forty-eight percent would not have asked their children to do anything differently. Most would be willing to take on debt again for their children.

In addition, when asked about which costs were the most stressful in their lives, student loans were at the bottom of the list. But parents are putting most life goals on hold to deal with student loan debt.

Politicians agree that skyrocketing student debt is a serious problem, but disagree on solutions. Numerous bills and proposals and ideas have been introduced in Congress and on the Democratic presidential campaign trail to radically shift the U.S. educational system by supporting loan forgiveness, granting bankruptcy eligibility for student loans, tracking down student debt relief scams, and lowering student debt for future students. But one thing is clear – student loan debt is a crisis.

Methodology: Freedom Debt Relief commissioned Atomik Research to run an online survey of 1,506 adults in the United States. Of the respondents surveyed, 1,003 are college attendees/graduates who are in the process of paying off the cost of college, and 503 are parents who are paying, or who have paid, toward the cost of their child’s college education. The margin of error for the college attendees/graduates is +/- 3 percentage points. The margin of error for the parents is +/- 4 percentage points. The survey has a confidence interval of 95 percent. The field work took place July 11-15, 2019. Atomik Research is an independent creative market research agency

Michael Micheletti serves as the Director of Corporate Communications at Freedom Financial Network where he is responsible for the strategic communications planning, knowledge dissemination and outreach to key consumer audiences. Before joining Freedom he held a variety of high profile communication and consumer education roles focusing on healthcare, tax and housing. He is a former reporter for FOX News, CNN and served as news director for Clear Channel Radio San Francisco.