With over $1.53 trillion in outstanding debt, student loans are the leading source of debt in America. With 67 percent of jobs currently requiring a bachelor’s degree or higher in America college has become an integral part of starting a career, but with the average 2018 graduate expected to walk off the podium with a staggering $40,000 in debt, it comes at a high price.
With an average repayment term spanning 21 years for a bachelor’s degree holder, many are concerned about the long term effects of living with large debt. Living in debt for a span of 20 years has a major impact on the lives of graduates as they delay major life events in order to pay off their debts. Student loan forgiveness programs are becoming more readily available in the United States, but these programs apply to those whom have made steady payments over a 20-year term.
As the percent of homeowners under the age of 35 continues to drop and the average retirement age rises, the effects of America’s debt problem are starting to show. To determine the state of college financing, we surveyed Americans, asking them what part of college financing is the most reliable, if taking on debt to attend a higher ranked college is worth it and if the student loan forgiveness term should be changed. Our poll of over 3,000 Americans found the following:
- Americans no longer consider student loans the most reliable form of college financing.
- 68 percent of Americans think the student loan forgiveness term should be lowered.
- Only 1 in 10 Americans think it’s worth attending a prestigious school over an affordable one.
Americans value cost over rankings when choosing a school
When asked if it is better to attend a highly ranked school on a loan or a college you can afford, 84 percent of Americans say it is better to attend a college you can afford.
Of the 16 percent of Americans who think it is better to attend a highly ranked school on a loan, 58 percent are men and 42 percent are women. 25 percent of men aged 45–54 responded that attending a highly ranked school on a loan is better, making them the most vocal demographic when it came to college rank.
Respondents located in the Northeast United States are also above the national average when it came to recognizing school rank. 26 percent of Northeasterners believe it is better to attend a highly ranked school on a loan than attending a school you can afford.
Americans consider scholarships the most reliable form of college financing
Student loans have often been the most reliable form of college financing as they are easy to secure for any American. With the changing economic climate of student loan debt, we wanted to determine if Americans still found student loans reliable. Only 18 percent of Americans responded that the most reliable aspect of college financing are student loans—making it the least reliable source among Americans.
The most reliable source of college financing for Americans, accounting for 26 percent of respondents, is scholarships. Scholarships are typically highly selective and are time-intensive to apply for, so it is surprising to see so many Americans find them reliable. In fact, as a source for overall college funding scholarships tend to, on average, only cover 20 percent of total education costs.
Of the Americans who think student loans are the most reliable, 58 percent of the respondents are women. A recent study found that women carry two thirds of the national student loan debt in America. With more of the student loan burden falling on women there is some evidence that parents of male student contribute more money than female students. A study by T. Rowe showed that 75 percent of parents of all-boy households prioritized saving for college rather than saving for retirement. In girl-only homes only 60 percent of parent prioritized saving for college over saving for retirement.
When it comes to region, American respondents located in the Northeast are more likely to respond that parent contributions are the most reliable form of college financing. 26 percent of Northeasterners seemed to mostly rely on parent contributions whereas only 19 percent of the rest of the nation responded similarly. Since Northeasterners also place a higher value on a schools rank, it is possible parents in these regions save more money for higher education.
Majority of Americans think the student loan forgiveness term should be lowered
Living with long-term debt is a major financial burden, especially as Americans plan for major life events. In order to determine how Americans feel about student loan forgiveness programs we polled Americans on how many years the student loan forgiveness program should be set to.
Overall, 68 percent of Americans responded the student loan forgiveness term should be lowered and 32 percent responded that the term should stay the same or be raised. The top response among Americans is that the student loan forgiveness term should be set to 10 years.
A common prerequisite for student loan forgiveness plans is that the borrower must have been paying off their debt for a time frame over 20-years. Additional prerequisites apply to student loan forgiveness programs, however many find the time frame is well past a healthy limit.
Although the average student loan plan is set to a full repayment over a 10-year term most Americans are not able to meet that deadline. A study by Citizens Financial Corp found that 60 percent of Americans paying off student loans are expected to repay their debts over a 20 year period. Although lowering the student loan forgiveness program to a five-year term may not be financially stable, forgiveness after a 10-year term seems to be the most popular among Americans.
Between men and women, 64 percent of men responded that the student loan repayment term should be raised in America, whereas only 36 percent of women said the same. Men are also less likely to find student loans most reliable for college financing. With women carrying over two thirds of the total student loan debt in America, it is likely that men perceive less of the long-term effects of student debt than women.
As student loan debt continues to rise in the United States, more people are considering changing how college education is funded in America. With 60 percent of Americans supporting moving towards tuition free colleges there is a growing movement behind education reform. For the Americans who are struggling to keep up with the burden of student loans, there are still options for help. Student loan refinancing and consolidation are both options that can offer different repayment terms and interest rates to help put you on track.