JP Morgan just released a new study that found the impact of student loan debt on people. We often consider it a personal issue you deal with alone, but the new study found that to be untrue. Its reach goes beyond just the individual, but also into families who feel the need to work together to pay it off.
Currently, student debt is the fastest growing type of household debt in America. The amount of student debt has reached $1.56 trillion, doubling its total in the last decade alone. This is causing many people and their families a lot of trouble. It’s also why many 2020 presidential candidates have made it a priority to talk about student debt.
According to the study, 19% of the 44 million student loan borrowers receive help from family and friends. The problem is said to be so bad that “families are spending more on student loans than key categories of basic necessities,” the report said. It’s affecting everyone, but hurts lower income families the most.
The report revealed that lower class people between the ages of 18-24 are spending a large portion of their budget on paying back student loans. This is forcing them to make a lot of tough decisions, even as they try to earn a living with their degree. They spend as much as 17% of their annual budget on student loans on average.
Families with Student Debt Feeling the Pressure
Of course, families are there to help each other. You want your child and/or grandchild to succeed, which is why they went to college in the first place. But many people sign on that dotted line to take out loans to do it. After they graduate, they’re forced to spend the next 10-20 years paying it off.
“By understanding the relationship between these student loan payments and other financial outcomes, we hope to provide policymakers, lenders and other stakeholders with valuable information that can help shape policies to ease this burden for America’s families,” Diana Farrell, President and CEO of JPMorgan Chase Institute, said in a previous statement.
The average amount Americans pay back each month toward their loans is $179. That’s only 5.5% of their monthly income, but many pay 11%. When you add on the increasing cost of rent and food, moreover the entire cost of living is going up, then you can see how this recurring debt is a problem. You don’t get a break from it until it’s completely paid off.
The report has revealed that only 44% of low-income people are able to keep up with their monthly bills. This is causing a massive crisis for many Americans who are just getting started out in life. Now we know that the burden is spreading to other family members who go out of their way to help.
