The Wellness Effect

Smothered Dreams

Student loan debt, not lack of ambition, besets the Millennial generation

by Caroline Feeney

Ms. Feeney is president of Prudential Advisors, Prudential’s national sales organization. Feeney is Prudential’s representative for the National Association for Female Executives and serves on the Executive Roundtable. She is a member of The American College board of trustees and also serves on the executive committee of the board. Visit

Young adults have been accused of being irresponsible with money, spending too much on avocado toast, artisan coffee and craft beer while refusing to take on grown-up responsibilities.

But a new survey by my company shows that nothing could be further from the truth. Millennials aren’t irresponsible at all – they’re just overwhelmed with debt.

The findings, summarized in “Student Loan Debt: Implications of Financial and Emotional Wellness,” show that an unprecedented load of student loan debt is smothering the dreams of young adults. Many of them cannot accomplish the three basic personal finance goals that we use to define financial wellness: managing day-to-day finances, achieving important financial goals, and protecting against key financial risks.

Without that foundation, they run the risk of being beset with long-term money problems, living from paycheck to paycheck, unprepared for difficulties as minor as a car repair. A medical emergency can become a life-crushing financial burden. They may wind up working well past normal retirement age because they can’t afford to leave their careers. It affects them emotionally, too, with 68 percent of respondents saying paying off the debt is an emotional burden. More than half – 53 percent – said they didn’t think they ever would be able to dig themselves out of debt.

Yes… worries

Even more important, student borrowing is preventing many young adults from experiencing the Wellness Effect – the peace of mind people get when they don’t have to worry about money. It improves their productivity at work and even makes them feel better emotionally and physically.

Student debt in the U.S. almost tripled during the past 10 years to $1.31 trillion at the end of 2016. The average 2016 college graduate left school with about $37,000 in student loans, almost triple the average of 20 years earlier, according to The Wall Street Journal. Student loan debt now outstrips every other type of consumer debt in the country except mortgages.

  • Prudential’s survey shows the profound effect that this debt is having on young adults’ lives:
  • 55 percent say their debt prevents or forces them to delay savings for emergencies.
  • 42 percent of those carrying debt are delaying buying a home.
  • 40 percent say their debt prevents or forces them to delay retirement savings.
  • 25 percent are delaying or have delayed having children.
  • 20 percent delayed or are delaying getting married.

Student loan debt also is affecting borrowers’ emotional well-being. More than 40 percent of students and graduates who haven’t yet paid off their student loans say thinking about the cost of attending college leaves them feeling frustrated, compared with only 22 percent of students and graduates who didn’t borrow. In addition, 52 percent of students with loans said the cost of attending college made them anxious, compared with 29 percent and 15 percent for students and graduates, respectively, who didn’t borrow.

The feelings were reflected in some of the comments from survey respondents when they were asked to give advice to others facing the issue:

  • “Accept the fact that debt will always be with you,” said a graduate still paying on loans who is making less than $29,999 annually.
  •  “I will never get out of debt so I can’t answer this,” said another still in debt who makes less than $29,999 a year.

A New Debt Burden

many students enter into loan agreements – many as they are just finishing high school – with little knowledge of what they are getting themselves into

The survey also showed that many students enter into loan agreements – many as they are just finishing high school – with little knowledge of what they are getting themselves into. While most adults are focused on the size of monthly payments when securing a mortgage or car loan, more than half of current student borrowers don’t know what their monthly payments will be upon leaving school.

Further, 52 percent don’t know if they had a co-signer; 42 percent don’t know how soon after graduation it was that they had to start repaying the loan; and 25 percent don’t know whether their loan is federal or private.

Perhaps not surprisingly then, borrowers are having a difficult time keeping up with their payments. Some 44 percent of college graduates still paying on their debts say their loans have been in deferral or forbearance at some point in time.

Other debts pile up as well: One-third of graduates still paying on their student loans say that they have been forced to take on more credit card debt or pay down existing credit card debt. Almost one in four – 24 percent – say that the cost of college has hurt their credit scores and made it more difficult for them to get other loans. About the same percentage said the debt has made it more difficult for them to help family members financially.

While most respondents agreed that college is worthwhile, only one in four agree with the long-held belief that student loans are so-called good debt – financial obligations that eventually generate more money than they cost.

The survey was taken in September and October of 2016 of 2,369 people, some college students, some graduates. Some respondents had student debt, some had paid back their loans, and others never had any.

As dire as the situation sounds, there are ways for incoming students to avoid being overwhelmed by college debt. The U.S. government offers valuable online resources, including the Federal Student Aid website. Another government website is the U.S. Department of Education’s College Scorecard.

Graduates with debt also can make bearing the burden easier. Steps include automating monthly payments to reduce the chance of default; creating a household budget, then sticking to it; and seeing a financial professional for professional help. The guidance of a professional can go a long way toward helping recent graduates take control of their financial lives – balancing today’s needs with tomorrow’s goals.

Advice from survey respondents included:

  • “Pay rent, buy food and throw all extra money at your student loans at the end of every month,” said a graduate with loans paid off earning between $80,000 and $119,999 a year. “It makes your late 20s way better.”
  •  “Attack it with your life, and get it done,” said a graduate still paying on loans who makes between $30,000 and $49,999 a year.

In the end, student loan debt has a significant effect on college graduates, but the overwhelming number surveyed – 88 percent – said they still would go to college if they knew then what they know now about college costs and student loan debt. Only 22 percent say they would have chosen a different school.

Students surveyed still didn’t regret getting an education. In the survey’s advice section, of the more than 2,000 responses, only one recommended skipping college. ◊



“Prudential Advisors” is a brand name of The Prudential Insurance Company of America and its subsidiaries.