As a graduate student and a personal finance blogger, I’ve thought a lot about the beast that is student loan debt. We all know that student debt is a problem in the country. That’s why I found this article on student loan debt and its effects on young people’s spending and aspirations very interesting.
Consider Shane Gill, a 33-year-old high-school teacher in New York City. He does not have a car. He does not own a home. He is not married. And he is no anomaly: like hundreds of thousands of others in his generation, he has put off such major purchases or decisions in part because of his debts.
“It is a new thing, a big social experiment that we’ve accidentally decided to engage in,” said Kevin Carey, the director of the Education Policy Program at the New America Foundation, a research group based in Washington. “Let’s send a whole class of people out into their professional lives with a negative net worth. Not starting at zero, but starting at a minus that is often measured in the tens of thousands of dollars. Those minus signs have psychological impact, I suspect. They might have a dollars-and-cents impact in what you can afford, too.”
My husband and I graduated college with $40,000 of student loans, in total. We’ve been chipping away at that loan for the past 5+ years, and now our balances are less than half of what we started with. Of course, I am now in graduate school, and CB will likely go to graduate school in the next few years, so we are not quite done with education or the financial requirements going to school entails.
My attitude has evolved through the years – I started with a very laissez faire approach: I’ll be able to pay back my loans and an educational investment is always worth it. Then I realized that student loans are forever and started calculating monthly repayments and the risk-averse, loan-averse, side of me got really nervous. I managed to graduate first year of MBA without taking on any loans, thanks to about $13,000 in scholarship, $25,000 from grandma’s estate, and $25,000 from personal savings.
So while I’m lucky enough that student loans haven’t really affected my day-to-day purchases, spending money to NOT have MORE student loans definitely have an impact on major purchases and life decisions. CB and I got married, but other life goals like houses and babies – and pets!! – have been delayed. If I didn’t go back to school and instead held on to my savings and money from grandma’s estate, I would have had ~$100,000 to put on a down payment. But pursuing graduate school isn’t 100% a financial decision, and I’m really happy I went back to get my MBA. So I believe this will all work out in the end. I believe!