Millennials now dedicate 18 percent of their salaries to paying off student loans, according to a Citizens Bank survey of 501 college graduates ages 18 to 35.
Of those surveyed, 60 percent now expect to be paying off student loans into their 40s. At the same time, fewer than 50 percent have looked into refinancing options to lower their monthly payments, consolidate their private and federal loans or otherwise improve the terms of their loans
According to College Board, the last five years have seen the cost of college increase 13 percent for public four-year colleges and 11 percent for private nonprofit four-year colleges. To help pay for college, 77 percent of respondents received federal loans, while a third received private student loans, the latter of which are typically smaller and require a credit-qualified co-signer.
“The long-term cost of college continues to be a major challenge for Millennials, even after they have established themselves in the workforce and significantly improved their credit from where they were when they started school,” says Brendan Coughlin, president of consumer lending for Citizens Bank. “As this generation of college graduates starts to contemplate future life events like home purchases and retirement, it becomes increasingly important for them to take control of their college debt, whether it’s through refinancing or other tactics that can help them limit its impact on their overall financial health.”
In light of this, some Millennials now express buyer’s remorse regarding their college investment. Of those surveyed, 57 percent regret taking out as many student loans as they did, and 36 percent say they would not have gone to college if they had known the extent of their current student loan debt.
Current Issue - May 2024