College Graduates Earn More, But Is The Expense Of Student Loan Debt Justified?

Graduating with student loan debt means no emergency savings and little money set aside for retirement for new college grads.

This month, college graduates will receive their diplomas – and, in many cases, tens of thousands of dollars in debt. Is the cost worth it, even though statistics suggest they would make roughly $22,000 more than their contemporaries with only a high school diploma?

Intelligent, an online journal devoted to educational concerns, has conducted interviews with 800 recent graduates. Among the conclusions:

Half of the people in this group stated they have less than $5,000 in their savings account, leaving little room for unexpected bills. In addition to not having a substantial savings or emergency fund, 43% of respondents said they live paycheck to paycheck frequently or always.

When faced with frequent financial uncertainty, as many in this survey group do, saving for retirement is likely low on the priority list. When asked how much money they had put into their 401(k) or other retirement plans, 15% of respondents claimed they don’t have one set up at all. Another 13% say they have less than $1,000 in their retirement account.

Some recent college grads are also saddled with substantial credit card debt. When asked how much money they owed on credit cards, one in every five respondents indicated they owed $20,000 or more, with 10% saying they owed more than $40,000. Similarly to their credit card debt, about 21% of recent college grads incurred more than $20,000 in medical debt during the pandemic, and 13% reported they have more than $40,000 in medical debt as a result of the epidemic.

Three-quarters of those polled still owe money on their student loans, with more than a third owing more than $20,000. Only 14 percent of this group indicated they have made payments during the two-year loan halt, and 56 percent said it will be somewhat or extremely difficult to resume paying their federal student loans.

“While a college diploma does offer up work prospects with increased earning potential, it does not guarantee graduates a secure financial future,” the survey found. “In fact, many of our survey respondents reported alarmingly low savings and significant credit card debt, and it appears that the upcoming commencement of federal loan payments, if and when it occurs, will simply add to the stress on this group of recent college graduates.”

Source: https://www.benefitspro.com/2022/05/25/college-grads-earn-more-but-is-the-cost-of-student-loan-debt-worth-it/