Like many other student borrowers, Sean Vaillancourt of Phippsburg, Maine, found that student debt forced him and his wife to put their lives on hold year after year.
“Student debt has been hard on my marriage because we both work mostly to pay off that debt,” Vaillancourt said. “We’re waiting to have kids and buy a house because our combined student debt is more than a mortgage on a house. This debt has been a huge burden and a point of contention throughout our past 10 years. “
“I often imagine what life would be like for us if we weren’t imprisoned by the debt of our current life,” he added.
Vaillancourt is among 7,095 borrowers who participated in a survey in 50 states for the new report “Indebted», a national study on the situation of student borrowers in 2018 by the social impact startup summer and the non-profit association Student debt crisis.
As total outstanding student debt breaks the $1.5 trillion mark — a number that has tripled since 2005 — the new report examines the toll that relentless stress and the financial pressure of high monthly payments have taken on the lives of borrowers at national scale.
“My loan was double my rent”
Among those who responded to the survey, borrowers owed an average of $87,500 in debt, but earned an average annual income of $60,000. (The average student loan debt nationally is lower, with Class of 2016 students carrying an average student debt of $37,172, according to 2016 statistics.)
Faced with seemingly insurmountable debts, some borrowers have had to put off weddings, home buying and other life decisions indefinitely. “Regularly, I consider selling everything and living in my car to help free up money to pay off debt sooner,” wrote one respondent from Texas. She had to postpone having children, getting married or buying a house, she said, due to the high costs of paying off student debt.
Natalia Abrams, executive director of Student Debt Crisis, says such stories are all too common. “We get stories from borrowers struggling with the idea of suicide,” she said. “These are not people who tried to get rich quick; they are not people seeking alms. It is so disheartening that they have not only received no help from the current administration, but it has canceled or eliminated programs designed to protect them.
Student debt has had “a disastrous domino effect for millions of Americans,” according to Abrams. “The day-to-day reality of the crisis is staggering. The average borrower has less than $1,000 in savings and 80% cannot save for retirement. And we’re not just talking about young people — we’ve spoken to many borrowers in their 60s who are still trying to pay off their student loans and fear they’ll never have enough to retire.
The study found that student loan debt interfered with people’s marriage and family plans, leading 19% of respondents to delay marriage and 26% to postpone having children.
Student debt also casts a shadow over everything from financial security to philanthropy. Crushing debt has prevented 80% of borrowers from saving for retirement, 56% from buying a house, 42% from buying a car and 50% from contributing to charity, according to the report. More than 85% said student loan debt was a major source of stress, and one in three said debt was the biggest stress in their life.
Some of the other key findings from “Buried in Debt” include:
— Nearly nine in ten student borrowers are struggling to make their payments. One in five borrowers say they can’t make the next loan payment, and 44% say it would be difficult.
— Most borrowers reported having less than $1,000 in their bank account, high student loan repayments partly to blame. Meanwhile, 58% of borrowers took a hit to their credit, with 10% failing a credit check for a job interview and 13% failing a credit check for an apartment.
— Six percent of borrowers had their Social Security payments or wages garnished.
— 18% report being in default on at least one student loan. This is the same percentage of borrowers that federal agencies show in default in the United States: 18%, or 8 million out of 44 million.
— One in three borrowers say their student loan bill is higher than their rent or mortgage bill, with 65% saying their monthly student loan bill is more than their food budget for the month.
–Nearly 40% of borrowers say they were unable to achieve their career goals. As for becoming their own boss, 28% said their student debt prevented them from starting a business.
“These survey results reveal that student borrowers are on thin ice, and many are failing without a lifeline,” said Will Sealy, Founder and CEO of summer, a startup dedicated to helping student borrowers repay their loans, in a written statement. “It means millions of Americans are facing financial calamity, with all the limitations and stress that comes with it.” (Sealy previously worked to protect students from predatory lenders as part of the Consumer Financial Protection Bureau.)
To make matters worse, a disturbing number of student loan companies have been sued for predatory practicessuch as abusive loan terms or convincing a borrower to accept abusive terms through deception or coercion.
According to the report, nearly 60% of borrowers said their loan officer gave them “confusing” or “useless” advice about their loans. A quarter of respondents faced surprise additional charges from their service company, 57% experienced unexpected demands after a sudden change in loan servicer, and 42% struggled to negotiate a change in repayment plan when they had financial difficulties.
“My loan now is almost equal to my rent, but it used to be almost double my rent,” said respondent Melissa Mills of Fort Worth, Texas. “I repeatedly begged Sallie Mae to help reduce monthly payments when a medical event occurs, to which they told me to quit my job and find a better paying one.”
Meanwhile, borrowers continue to default on student loans every 28 seconds, according to Student Debt Crisis – contributing to wage garnishment and an ongoing debt spiral that could stunt the country’s economic growth. No wonder Federal Reserve Chairman Jerome Powell suggested that borrowers could pay off student debt in the event of bankruptcy. And a study of Levy Institute of Economics at Bard College found that simply canceling all student debt boost the US economy by $1 trillion.
As the debate continues, a survey respondent from Pennsylvania identified as “Colleen” discussed her plight in a passage echoed by many others. “My student loans prevented me from really living,” she writes. “They stress me out more than I can explain. I pay and pay and pay, and the balance never seems to go down. Two of my loans have interest rates of 15% and I have a third loan at 12%. I spend almost two full paychecks on my loans a month. It’s frustrating and honestly, I feel completely defeated.