" … According to a survey from Bankrate, nearly half (45%) of all adult Americans who took out student loans ended up delay some major financial or personal milestone. The effect is most notable among student loan borrowers in the 18-29 age range, where 56% say that this debt has put them off of investing or starting a family." …
Thats good news isnt it?
When I was 23, we married and started a family, * before* we had a house, or even knew what we wanted in life, let alone realized how much responsibility we had taken on.
I’m sure household debt plays a part, as well as the cost of housing.
Housing is more expensive, more difficult to find and in my city, everyday, blocks of single family homes are removed to add " multi family" units, that are barely big enough to swing a cat in, let alone raise a couple toddlers.
What a deal. 100sq ft, for the low, low price of $600 month.
http://q13fox.com/2013/05/28/living-small-in-seattle-apodment-developers-exploiting-loopholes/
A reasonable amount of debt (1/2 of expected starting salary or less) is leverage and a good investment in one’s future. I actually like to see young people valuing education over the shiny new home or car. Delayed gratification may not always produce the economic numbers our consumer society celebrates but a bit of it will not hurt a young person. The key is to have done the research and have a plan as to how to get the position with the starting salary. Jobs do not appear miraculously along with the diploma. Internships and co-op positions are an important part of the process.
Mmm, I’m not sure about the delayed gratification thing. I’ll get back to you when the amount of time I’ve actually enjoyed the fruits of my labor has met or exceeded the amount of time I’ve been delaying gratification, lol.
I have a relatively small amount of student loans - around $38K, and I have a PhD. It’s interesting how much student loan culture has changed. When I say that I have $38K in loans around my friends who have gone to college, they scoff and say that’s so low, or they applaud the choices I made to keep my debt that low even though I went to college + grad school for 10 years. When I mention the number around friends my age who didn’t go to college, or older people who went before the bubble started inflating, their eyes get big and they can’t believe that I have that much debt AND that I’m not worried about it at all. Thankfully, my starting salary of my first full-time job (which I start two weeks from today!!) is more than enough to handle it 
But most of my friends are also graduate-educated and have way more debt than I do.
And yes, it has delayed purchases, even if we don’t realize it or would articulate it that way. Me, I delayed home buying and car-buying not because of my student loans, but because I was in grad school without enough resources or stability to buy a house or car. I bought my first car last summer, at 28, when I started a postdoc in a town where I needed a car. Buuuut because I waited, I was able to buy a brand new car at a great deal. I don’t anticipate that my husband and I will be able to buy a house until our mid-to-late 30s (we’re 29 and 30 now). But it’s not just student loan debt; it’s also the necessity of staying flexible in this economy. With a PhD and an interest in the tech/media/entertainment industries, I was trying to stay flexible - able to move wherever I needed for a new job. My new job is across the country on the West Coast. If I had bought a house here on the East Coast, I’d have to try to unload it before I moved. A lot of my friends have not bought property not only because we can’t afford it in the expensive East Coast city in which we live (especially with hundreds of dollars of student loan payments flowing out of our accounts every month), but also because we’re not sure where we’re going to end up permanently and have tried to keep ourselves open to possibilities far and wide. A lot of my friends are aspiring academics, too, and for those jobs you have to be willing to move anywhere in the country.
So it’s a lot of things, not just loan debt.
Not only do you need to have a plan, you need to ensure that your plan is realistic. I see lots of kids saying that they’re fine borrowing $100K worth of loans because they’re going to be an investment banker making $$$$ in a few years, or that they’ll just work every waking hour and live with their parents until they’re 35 to pay off the debt, without realizing that those things are not possible and only sound great when you’re 17 and staring down a choice between two colleges.
To an increasing extent, the jobs market of today is pay-to-play, with the number of jobs paying above-average salaries to those without a college degree decreasing year by year. A lot of the ones that remain are jobs which are unpleasant in some way-making a high salary necessary to attract jobseekers-or see literally hundreds of applicants for every position. And the best return on investment in a degree tends to come from private schools, where an undergraduate education can now cost over a quarter-million dollars.
Sad to say, but for a lot of people this debt is the cost of ensuring good career prospects in today’s economy.
I hope this is not true. If this is “truer”, our society becomes more backwards – backward to the age that there are royal families - the only difference is that the royal families are now those who have more financial resources.
I remember someone made a parallel between owning the land in the past and owning the “investment” nowadays. Whoever owns that tend to have more power.
This does bring up an interesting point that relates to the thread. While $38K is by all means a manageable sum of money, the other thing to consider is that for that kind of money it is unlikely that you will have to pay significant interest on it while in school, as it should be subsidized. For loans that are in the $50K+ range, in addition to the lost income from doing PhD programs, your direct cost will increase because your interest will accumulate.
Graduate school is already a matter of delayed gratification, and a decision that is almost certainly not profitable if you consider it from a purely economical perspective. Add in accumulating debt, and it would make graduate school a non-viable career option.
Thankfully, for me personally, my scholarships were more than adequate to cover costs of attendance, and I didn’t have any debt at the end of it all. I can see how much of a burden it is on those who were not so lucky, who not only have to pay the sum of money specified but also have to have a job that pays that bill, even if they don’t like it. It is said that the biggest reason people stay in jobs they hate is because of debt - I was lucky not to be in a position where I had to do this. These days, only a minority of college attendees are that lucky.
I can understand putting off car and home buying, but why would people put off marriage as a result of having student loan debt? Its usually cheaper to live as a couple than a single.
Hmmmm…trying to think about this from a “big picture” point of view…
Presumably all that intellectual capital is doing …something…of merit, even if it’s not contributing as expected to our consumer-driven economy.
I guess only time will tell if it was a wise expenditure of time and money.
OTOH, maybe Mike Rowe is right and some of them should have become carpenters, plumbers and electricians.
I thought I was going to be one of these people when I graduated with close to 60k in debt and only landed a 30k job. I had to live with my parents and saw no way that I would be able to move out any time soon, forget buying a house, I just wanted an apartment and couldn’t have it. That was devastating. I thought I would never even be able to have pets, much less children. I was afraid by the time my debt was paid off, with the number of years of fertility I was likely to have left I probably wouldn’t be able to have as many children as I dreamed. I was blessed to get to know all four of my grandparents into adulthood and have a wonderful relationship with them, they were all at my college graduation. Sadly my grandpa passed away shortly after I got engaged, but my three remaining grandparents were present at my wedding and, god willing, will get to meet their great grand children. My parents will probably be gone by the time my kids start college, and they won’t be the young, healthy grandparents I had growing up to take me hiking and camping. My sisters children are already so old that they would be in college by the time I thought I could have children, my children wouldn’t have cousins to grow up with like I did. That weighs so heavily on me. I felt like I had ROBBED my children, doesn’t everyone want to give their children at least as good as they had, if not better? We have so VERY little family and they are almost all in their 50’s and 60’s, by the time our kids are my age they will only have us. The thought of having to delay my life by 10 years to pay back my loans completely broke my heart. That entails, to me, a very significant loss. It’s not about having the shiny car, but being able to be an established, financially stable adult and have a family is EXTREMELY important to me and I didn’t want to be nearing middle age by the time I got started on it! Life is so short! What good is the degree and the career if you can’t have a family? If the increase in earnings by getting the degree doesn’t trump your debt, it’s not worth it.
As it happens, I got lucky and none of that turned out the way I was afraid I would. Within a couple years I had raised my salary to 40k, which is probably the max I’d be able to earn until I had 8-10 years of experience and could go for management. It still wasn’t really enough to make ends meet, but it gave me hope. I just so happened to marry someone who had made better financial decisions than I had, never went to college, made twice as much money as I did, and had as much in savings as I had in debt. He bought our house. We were able to marry whenever we wanted to without me worrying if I could afford to live with him. We hope to maybe have a child next year. My loans will be paid off 10 years post-graduation, and it’s been a lot harder than it would have been without the loans, but the world didn’t end. I will likely have very young children when they’re paid off, just in time to pay for T-ball and whatever else. 10 years isn’t as long as I thought, though I would have been very sorry to have to wait to start my life until then. I got lucky that it didn’t work out that way.
I think most millennials have a combination of less debt than I have, and more familial support than I have, and their situations are not as scary. Maybe they might have to wait those three years I waited for my salary to increase and then they would be okay. That’s not so bad, nobody needs to buy a house straight out of college. But this risk of having to delay your adult life should very much be emphasized to kids considering taking on big loans for school. To an 18 year old college is the most important thing in the world, and it’s our fault they think that way, that’s what the adults in the world are telling them. But it is so not, it is a few years of your life and what happens after is forever. If it is going to significantly hamper your ability to reach future milestones, it’s not worth it. College should make it easier to get there, not harder. If it’s going to make it harder, you need to re-evaluate your priorities and your choices.
Yes, for some reason people seem not to register the fact that as the years go by, the loan balance decreases and one’s income usually increases, so by the time you are ready to buy a house (we did at 28 back then, but 30 would have been fine), most of your loan balance is paid off and your income has increased for 7 or so years, so it is quite manageable to have a “normal” life path.
Well it does make it harder to have a lower paying career path, or to do anything if things don’t happen to go well. Many individuals would perhaps be willing to take a low-paying job (such as teacher or nonprofit worker) if not for the loans that they have to pay to do so. And the interest accumulated if and when you are jobless will generally set you a few years back in terms of loan payments.
Debt, though manageable in reasonable quantities, is not a fun thing. This goes double for debts without collateral, where you don’t have an easy out in case of trouble. Losing a house or a car, while certainly painful, is not as bad as being perpetually indebted, as anyone who has too many student loans will certainly be.
Bay- that works if you graduate with loans and a plan, and stick to the plan. It worked for me and H; it worked for my siblings, and it’s working now for my nieces and nephews.
But I see lots of situations in real life where it doesn’t work. The Physician’s Assistant who now hates her job so is going back for a Master’s in Public Health (still has loans for undergrad btw). The lawyers from third tier law schools who didn’t pass the bar, are working in paralegal type jobs figuring out how long it’s going to take them to get out from under the debt (answer- a long time). The kid who was on the 6 year plan for undergrad- ended up with a vocationally oriented communications degree and discovered that paying back loans on a “permanent temp” salary is very, very hard. And that the really good jobs at Politico and The New Yorker and CNN go to kids who studied history and political science in undergrad, not Mass Communications.
My loan balance to salary ratio wasn’t going to balance out before the loans would have been repaid, and I wonder with these big debts if other people aren’t in the same situation. I maxed out my salary where I was within 3 years and would have needed to work another 8-10 before I could have earned appreciably more money. By then my loans would have been paid off anyway. My debt is just too high for the kind of money my degree can command where I live. And I was limited to the Detroit area because I couldn’t afford to move out of my parents house, which didn’t exactly help.
When the decision was made, I thought I was going to be pursuing different, more lucrative fields after undergrad. But midway through junior year I realized I didn’t actually have those skills and plans changed. It would have been nice to try those classes sooner and find out earlier so I could have switched gears, but going to community college first I hadn’t had that opportunity.
@JustOneDad -Fareed Zakaria makes a rather convincing case that a college degree is the equivalent of finishing high school half a century ago, in terms of job prospects. It’s become the new bare minimum, and high school graduates (or, worse, dropouts) will, with some exceptions, be at a severe disadvantage in the job market.
Of course, it’s important to note that because everyone accepts that finishing high school is all but indispensable, anyone can send their kids to a free public HS if they so choose. That’s why, politicking on rich and poor aside, I think public universities should be a lot cheaper than they are. It’s a good deal for the students, who will make more over their lifetimes unless they major in something that doesn’t open the door to any jobs, it’s a good deal for the government because that extra income is taxable, and it’s a good deal for companies-especially in STEM fields-who can’t find all the workers they need among the current graduate population.
How often do many of those jobs actually need a university degree, though, in terms of actual knowledge gained? Job requirement inflation is rather alive and well these days.
@NotVerySmart I think there is a lot to that.
And, who was it that said “All I Really Need to Know I Learned in Kindergarten”?
I think there’s some after the fact rationalization here.
Do people who have the same number of years of education but smaller educational debts really marry/buy houses/have children earlier than their equally educated age cohorts with greater indebtedness? I think you have to show that they do to conclude that it’s student loans which cause the delay. For example, do those who heed the advice of one contingent on CC and go to a less expensive public U or accept merit money for undergrad and then go on to medical school, thus limiting their debt, marry/buy houses/have children at younger ages than their medical school classmates who owe money for both undergrad and medical school?
Or is it the mere fact of being in school and not earning any money which causes young people to delay these things? Most of the young people I know who get PhDs are fully funded by the universities where they study. Yet, especially if their significant other is also an academic, they delay marriage until they’ve both finished their degrees and obtained gainful employment. In other words, it’s their relatively low income and their slender job prospects–especially in the humanities and to some extent social sciences–which causes them to delay, not their non-existent student loan debt. Their classmates who have better paying jobs with more security are more likely to marry, own a home and have children, even though they actually owe much more.
There is LOTS of data which shows that poor uneducated Americans are far less likely to marry than those with a college degree. Again, I think that difference is the result of both lower incomes and less certainty about future employment.
@Emaheevul07 - your post (#9) was awesome, wow.
=D>
Employers can find enough people with degrees so it really doesn’t matter. In a lot of businesses you can’t get in the door without a degree.