Student Loans Keeping Almost 70% Up at Night; Still, Majority Say Education was Good Investment

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A record high $1.2 trillion in student loan debt nationally has been blamed for everything from slowing the housing recovery to limiting the number of business startups. A new survey by Credit Karma finds that while student loans are having some impact on romantic relationships, and even keeping people up at night, most people felt that the return on their academic investment would eventually pay off.

Quality of Life Issues

Student loan debt is keeping people up at night and impacting their ability to pursue the milestones like home and family that they said in previous Credit Karma studies they would like to achieve.

Here are the results:

  • Almost half (46%) said their romantic relationships had been negatively impacted by student loans to some degree.
  • The majority (69%) said that they agreed at least slightly with the statement that student loan debt prevents them from realizing their personal goals; one in three (32%) said that statement described them very or extremely well.
  • A majority (69%) said that they agreed at least slightly with the statement that thinking about student loan debt kept them up at night to some degree. Almost a third (30%) said that statement described them very well or extremely well.
  • An overwhelming majority (85%) said that they agreed at least slightly with the statement that their education was a good investment; 53% said that statement described them very or extremely well.

How Much and How Long

With the majority reporting $10,000 to $50,000 in outstanding student debts, many were looking for ways to reduce the burden, either by paying more than the minimum, refinancing or taking advantage of federal repayment plans. But many were not aware of their options when it came to modifying terms.

Here are the results:

  • The majority of people with student loan debt took out loans totaling between $10,000 and $50,000 (60%), with almost one in four carrying between $10,000 and $20,000.
  • The majority (52%) had taken out federal loans, but one in three had also taken out private loans.
  • One in five (20%) have paid off their debt, but almost the same percentage (18%) still owe between $10,000 and $20,000.
  • Three out of four (75%) said that they at least sometimes paid more than the minimum; one in three (32%) did this often or always.
  • Almost half (44%) hoped to pay off their loans in five years, an equal number said it could take as much as 10 or 20 years. And almost one in 10 said it could take more than 20 years.
  • Only one in four (26%) had ever refinanced or consolidated their student loans; the bulk of those (42%) said they did so to reduce monthly payments with a third saying they were trying to reduce interest payments over the life of the loan.
  • One reason some are not refinancing is because they don’t want to lose their federal borrower protections. One third are taking advantage of federal repayment plans like the Income-Contingent Repayment program.
  • Almost 40% of those who have not refinanced said they were not aware they could refinance to reduce payments and interest.

The good news is that the profiles of Credit Karma members between the ages of 18 and 34 who have logged on since January 2015 show that it is possible to have student debt and high credit scores. Almost one-in-three millennials with an excellent credit score also have student debt. More findings on what these high credit score millennials have in common can be found here.

Methodology: Credit Karma, in partnership with Qualtrics, surveyed 1,050 21-40 year-olds who have taken out 1 or more student loans. Research was conducted between June 1 and 6, 2016. All data was aggregated and anonymized.

Category:  Student Loans

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