Student loans lead the way as Americans continue to fret about their finances.
A survey by Bank of America talked to 1,000 Americans throughout the U.S. and discovered that for 51% of participants student debt is very stressful and is a major concern for at least the early part of their career.
Participants were also worried about not having sufficient savings, the prospect of a looming recession, as well as their capability to pay off their debts.
Acccording to Aron Levine, Head of Consumer Banking at Bank of America, “Student debt is probably leading the way as the absolute No. 1 major concern. Whether it’s the actual student who took on the debt, parents, grandparents who have co-signed for the debt, that’s a huge one.”
The survey results show that aside from their mortgages, 73% of participants had some form of debt: 43% credit card debt, 36% auto loan debt, 20% student debt, and 15% in personal loans. Almost half of respondents with student loan debt owe more than $20k in overall debt.
It’s no secret that over the past few years, student loan debt has risen to the bloated level of $1.49 trillion. A much lesser known fact is that increasing numbers of borrowers are unable to meet repayment deadlines. In the first quarter of this year, delinquency rates rose from 9.08% to 9.54%.
In the South, student loan burdens are especially crushing. In a study looking at American cities where residents were most indebted relative to their salaries, thirteen of the bottom 20 cities were in the South.
Some of the graduates in those cities are seeing 70% or more of their annual income owed in student debt. On the other end of the spectrum, 10 of the top 20 cities with the best debt-to-earnings ratio were in the state of California.
More Falling Into the Trap
Levine mentions that not only graduates are feeling the burden of student loans. Parents and grandparents are also feeling the hurt in their pockets.
Last year, 69% of college students on average took out loans of $29,800, of those 14% were parents taking out loans on behalf of their children. Those Parent-Plus loans amounted to around $35,600 on average.
It is this same group the 40-50 age group that has the highest terms of debt that transitions into delinquency. This group is finding it harder and harder to pay back their children’s student loans.
Hope On the Horizon
The student debt deficit is in crisis now, but Democratic presidential candidate and Massachusetts Senator Elizabeth Warren brings some hope to the beleaguered. As part of her election campaign, she has promised to eliminate student loan debt of up to $50,000 for 42 million Americans.
Warren said in a press release, “The student loan debt crisis is real and it’s crushing millions of people. It’s time to decide: Are we going to be a country that only helps the rich and powerful get richer and more powerful, or are we going to be a country that invests in it’s future?”
That definitely sounds hopeful for everybody with student loan debt out there. For any other financial advice you may need, feel free to reach out to the Financial Helpers.
