Not only obstructing Millennial spending, but may be negatively influencing college and career choices
CHARLOTTE, N.C., Oct. 6, 2016 /PRNewswire/ — Nearly two-thirds (63.3%) of millennials graduated, or will graduate, with student debt, and 46.5% currently owe money on their student loans.
The burdens of student debt, however, extend far beyond just the borrowers, implicating education, occupations, spending and the economy.
Those are findings of a new survey of 1,338 millennials — those born between 1980 and 1995 — who enrolled in at least some post-secondary education, conducted by LendingTree®, the nation’s leading online loan marketplace. Additionally, LendingTree ranked all fifty states and top 100 cities based on average student debt*, averaging $27,162 per individual.
According to the survey, millennials pay roughly $317 per month towards their student loan repayment. When asked how much student debt affects his/her spending ability, 30.54 percent answered, “Very much,” 30.40 percent answered, “Somewhat,” and another 14.91 percent said student debt had “very little” impact on their spending.
Less than one quarter, 24.15 percent, feel no effects of their student debt in relation to their spending.
Millennials who are currently employed report an average salary of $48,146. When factoring in Federal and State Income Taxes, Social Security, 401k, Medicare and insurance costs, a typical millennial would net roughly 70% of their gross income, depending on exemptions, state and elections. In this example, monthly take-home pay would total $2,808.
Debt taking 11.3% of average net income
Payment towards student loan debt would consume approximately 11.3% of the average millennial’s net income each month.
Because student loan payments eat roughly $317 per month on average, millennials may be forced to delay certain purchases or life events due to their debt obligation. When asked which investment, purchase or life event has been delayed due to student debt repayment, the most frequently cited were travel (53.27%), purchasing a home (45.31%), buying an automobile (44.74%) and saving for retirement (38.07%).
If student debt obligations were to hypothetically be absolved, millennials said that the newly-freed funds would go towards saving for emergencies (53.98%), buying a home (41.76%), retirement savings (31.68%) or be spent on travel/vacations (31.25%).
The survey found that millennials’ student debt influenced education decisions. The cost of tuition and the amount of potential student debt affected either the choice of school (32.97%), major (3.55%) or both (14.12%).
Debt Dictates Choice
Said another way, student debt concerns helped determine where and what students study for slightly more than half (50.6%) of respondents. Even more troubling, 15.06 percent were accepted to a “better” school but found attendance to be unaffordable, and another one third (33.2%) didn’t even apply to a “better” school due to the cost of attendance and increased student debt potential.
More than half (55.9%) of those surveyed have feelings of financial regret related to their post-secondary education. The most common is that he or she wished they went to a more affordable school (29.05%), followed by wishing they chose a different major or area of study (20.81%), or feel they should have attended a different school for their money (14.05%).
Unfortunately, 10.41 percent feel as though they shouldn’t have attended college at all, and 10.14 percent feel overeducated, paying for education beyond what is necessary for their career.
Not only were school choices and areas of study impacted by student debt fears, but 38.34 percent feel that having student debt affected his/her career or occupation choice.
The study also found that student debt levels vary widely by location. The ten states with the highest outstanding education related debt per student loan borrower, based on data within My LendingTree, are:
Rank / State – Avg. Outstanding Student Debt
- Washington, D.C. – $39,832.12
- Maryland – $32,567.41
- Illinois – $29,865.77
- Georgia – $29,788.87
- Colorado – $29,759.70
- Virginia – $29,469.87
- California – $29,112.75
- New Jersey – $28,991.27
- Florida – $28,768.51
- Connecticut – $28,398.35
LendingTree further analyzed the data to see which cities have the highest outstanding student debt, according to data from My LendingTree account holders:
Rank / City – Avg. Outstanding Student Debt
- Boston, MA – $43,102.16
- Irvine, CA – $42,490.77
- San Francisco, CA – $39,963.43
- Washington, DC – $39,806.71
- New York, NY – $37,401.15
- Scottsdale, AZ – $37,400.56
- Madison, WI – $36,260.33
- Seattle, WA – $35,892.31
- Irving, TX – $35,781.79
- Oakland, CA – $35,144.33
An excel spreadsheet of the city and state rankings based on student debt and student loan amounts can be downloaded here.
*Rankings are based on outstanding student debt owed by over 1.9 million student loan borrowers with My LendingTree accounts.
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