Majority of borrowers say Fed student loan debt isn’t worth it, CNBC survey finds
Yet many millennials and Gen Xers are far more skeptical. Some 63% of respondents between the ages of 35 and 44 said that, given their current situation, it was not worth taking out federal student loans.
The average loan amount for federal borrowers is $36,510.
Kate Bernyk, 39, graduated from college nearly 15 years ago with two communications degrees and about $100,000 in student debt.
“I used to be really proud to have a master’s degree, but now it’s kind of silly,” said Bernyk, a New York-based communications specialist. “I feel like maybe I shouldn’t have gone because it’s really hard to put a price on the upside versus the downside of going into debt.”
She still owes over $30,000 in student loans.
A bachelor’s degree holder earns a median of $2.8 million over their careers — 75% more than if they only had a high school diploma — even though, disaggregated by gender, women with a bachelor’s degree have a median lifetime income of $2.4 million, compared to $3.3 million for men.
Kate Bernyk, 39, graduated from college with two communications degrees and about $100,000 in student debt.
CNBC | Andy Tenke
End of loan repayment break
Borrowers were granted a reprieve on federal loan repayments when the Covid-19 pandemic hit in March 2020. This relief has since been extended five times and is now set to end in May. Pausing payments gave many borrowers more money to use for day-to-day expenses (48%) and to pay other debts (35%), according to the survey.
Yet when federal loan payments resume, a third or more of borrowers surveyed said they will have to delay other financial goals, such as paying off other debt (42%), investing money (40% ), saving for retirement (38%) or buying a house (33%).
Source: CNBC + Acorns Invest In You Student Loan Survey, conducted by Momentive
“It’s like a mortgage without the house at the end,” Bernyk said.
The potential downturn in the economy is one reason proponents of student loan forgiveness, like economist Kristen Broady, are asking for more.
“If people don’t have to pay that money back,” said Broady, a fellow at the Brookings Institution, “that’s more money they can spend on durable and undurable goods or services. That money goes straight into the economy.”
More Invest in yourself:
Most Americans want Biden to prioritize student loan forgiveness, poll finds
Student loan holders are more likely to be women and people of color
81% of adult student loan holders say they have had to delay key life milestones
A majority, 57% of those polled, said they believe President Joe Biden should make student loan forgiveness a priority, but opinions are divided on how to do so.
About a third of respondents said all student debt should be forgiven, almost the same amount said canceling loans only for those who need it, and about one in four said there should be no forgiveness.
Biden campaigned on a proposal to cancel $10,000 in student debt. Some Democratic lawmakers, including Sen. Elizabeth Warren, D-Mass., and Majority Leader Charles Schumer, DN.Y., are calling on the president to forgive student debt up to $50,000.
However, Representative Virginia Foxx, RN.C., the top Republican on the House Education and Labor Committee, said a blanket loan forgiveness would be a “massive mistake.” – and extending the student loan suspension has already cost taxpayers more than $150 billion.
Denisse Quintanilla, CNBC intern and first-generation student, plans to graduate in May. She doesn’t know what the terms of her loan will be once she has to start making payments.
“It’s always overwhelming to think about how much I would have to pay each month to not be in my 30s or early 40s and still have my college debt,” Quintanilla said.
While students may receive guidance when borrowing money for the first time, financial aid expert Mark Kantrowitz says it often fails.
“Every dollar they borrow will cost them two dollars when they pay off the debt, and they don’t really think about it,” he said.
Bernyk, who has held nonprofit and government jobs for more than 10 years, has had plenty of time to reflect and try to tackle his student debt burden. She may have found a way to get to the finish line.
Last fall, the Biden administration eased eligibility requirements for civil service loan forgiveness. Bernyk said she is working with her loan officer to qualify under this federal program so that her remaining loan balance is cleared. The new rules are in effect until October 31, 2022.