As talks escalate over student loan forgiveness, a new survey finds that high debt is preventing young borrowers from saving for retirement or emergencies, buying a home or paying off other long-term debt. high interest rate like credit cards.
According to the Bankrate.com survey, about 60% of American adults who have student loan debt have put off making important financial decisions because of this responsibility. For Gen Z and millennial borrowers, that number jumps to 70%.
“Despite this, a majority of American adults with student loan debt say their degree unlocked career and salary opportunities that wouldn’t otherwise be possible, highlighting the complicated relationship many Americans have with their student loan debt. student,” the financial resource site writes.
The survey further revealed that young borrowers are more likely to block important financial decisions than their older counterparts. In fact, 74% of Gen Z borrowers and 68% of Gen Y borrowers have put off financial decisions, compared to 54% of Gen X borrowers and 42% of Baby Boomers.
“Among younger generations, Gen Z respondents say they are more likely to put off buying or leasing a car, while Millennials are more likely to put off boosting their emergency fund and buying a home,” the survey notes.
However, some financial experts argue that borrowers should be wary of postponing other types of debt repayment, especially credit card debt, which usually comes with exorbitant interest rates.
“Debt repayment should prioritize high-cost credit card debt, especially over federal student loans, which have many favorable provisions unavailable on other debt, such as deferment, repayment based on income or debt forgiveness in some cases,” Greg McBride, Bankrate’s chief financial analyst, said in a statement.
Even with the burden of high student debt, McBride added that people shouldn’t overlook the benefits of a college degree.
“For many, this will mean a greater ability to save over the long term,” he said.
Still, it seems many young Americans want government action to tackle student debt, which has reached $1.75 trillion nationwide, according to the Department of Education. In addition, about a quarter of student borrowers, or ten million people, are said to be in default.
A recent poll by the Harvard Kennedy School’s Institute of Politics showed nearly nine in ten young Americans support some form of government action on student debt, but only 38% support full cancellation. debt.
The survey also found that 27% of respondents support the government providing repayment options without any debt cancellation and 21% favor debt cancellation for those who need it most. Only 13% think the government should not change its current policy.
Ethen Kim Lieser is a Washington State-based finance and technology editor who has held positions at Google, The Korea Herald, Lincoln Journal Star, AsianWeek, and Arirang TV. Follow him or contact him on LinkedIn.