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Young Americans — especially those between the ages of 25 and 34 — are the age group where student debt is most common. In fact, one-third of adults in this age bracket have federal student loan debt, according to recent data from The Washington Post.
These results are not really surprising, since adults aged 25 to 34 are probably all recent university graduates.
The next age group where student debt is most prevalent is 18 to 24 year olds, followed closely by 35 to 49 year olds. Here is a full breakdown of the percentage of each age group with federal student debt:
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What student borrowers aged 25 to 34 should consider
Although we would ideally expect student debt to decline as people age, given that borrowers have more time to make payments, being in their late 20s and early in your thirties with student loans can definitely put you in a difficult financial situation. In this age range, you have had some time since graduation to build a career with a salary that allows you to make monthly payments, but you are also faced with other competing financial commitments, whether it’s a first mortgage, starting a family, or even adding graduate student loans to your college debt.
It’s important for adults in this age group to think about priority monthly payments (like rent, utility bills, and a car loan). It can also include expenses that allow you to work and earn income, such as childcare costs. With federal student loan payments on pause, now is a good time to make sure those other payments are taken care of.
What student borrowers of all ages should consider
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Others who have savings set aside can go ahead and continue paying off their student loan even with the break. Since all payments during the freeze will be made directly from your principal, you can reduce it more quickly than if you were paying on an interest-accumulating balance. Also, when the forbearance period ends and payments and interest resume, then you will have a smaller balance, which means less interest can accrue.
If you have private student loans
Private student loan borrowers are in a different boat since there has been no pause in payment or interest on their loans. These borrowers may want to consider refinancing with a top lender to see if they can get a lower interest rate than they are currently paying.
With the expectation of further interest rate hikes in the coming months, now is the time to refinance any high variable interest rate debt before it becomes more expensive. Refinancing at a fixed interest rate locks you into that same rate for the duration of your new loan. In today’s economic conditions, it is likely that a fixed rate today will be lower than a fixed rate months later.
A lender like SoFi offers fixed-rate loans with loan terms of five, seven, 10, 15, and 20 years, plus no origination fees for refinancing. Borrowers also have the option to apply with a co-signer, as well as access payment protections, free career coaching and financial advice from planners.
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From $5,000; more than $10,000 for residential medical/dental loans
Minimum credit score
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Editorial note: Any opinions, analyses, criticisms or recommendations expressed in this article are those of Select’s editorial staff only and have not been reviewed, endorsed or otherwise endorsed by any third party.