A new study from Citizens Bank, called “Millennial Graduates in debt,” shows that most recent college graduates with student loans underestimated their monthly payments and now expect to still be paying off their loans into their 40s. The research indicated that college grads age 35 and under with student loans now are spending nearly one-fifth […]
A new study from Citizens Bank, called “Millennial Graduates in debt,” shows that most recent college graduates with student loans underestimated their monthly payments and now expect to still be paying off their loans into their 40s.
The research indicated that college grads age 35 and under with student loans now are spending nearly one-fifth (18 percent) of their current salaries on student-loan payments and that 60 percent now expect to be still facing payments after the age of 40.
At the same time, fewer than 50 percent have looked into refinancing options to lower their monthly payments, consolidate their private and federal loans, or otherwise improve the terms of their loans, according to the Millennial Graduates in Debt survey.
According to The College Board, the cost of college has increased 13 percent for public four-year colleges, and 11 percent for private, nonprofit four-year colleges, in the last five years. To help pay for college, more than three-quarters of respondents (77 percent) in the new Citizens’ survey indicated they had received federal loans. One-third of respondents said they had taken out private student loans, which typically are smaller, and in most cases, require a credit-qualified co-signer.
“The long-term cost of college continues to be a major challenge for Millennials, even after they have established themselves in the workforce and significantly improved their credit from where they were when they started school,” said Brendan Coughlin, president of consumer lending at Citizens Bank. “As this generation of college graduates starts to contemplate future life events like home purchases and retirement, it becomes increasingly important for them to take control of their college debt, whether it’s through refinancing or other tactics that can help them limit its impact on their overall financial health.”
Citizens’ Millennial Graduates in Debt survey found that graduates with student loans grappled with the following trade-offs required to make their student-loan payments every month:
- 54 percent have limited their travel
- 50 percent have restricted their shopping for clothes, shoes, and accessories
- 46 percent have controlled their spending on entertainment and social events
- 45 percent have limited their spending on eating out
- 40 percent have restricted the amount they can spend on rent or mortgage payments
In light of this, some millennials now express buyer’s remorse regarding their college investment, with 57 percent saying they regret taking out as many student loans as they did. More than one-third (36 percent) of millennial graduates with student loans said they would not have gone to college if they had known how much it was going to cost them.
“Unfortunately, the long-term cost of college is leading some graduates to question the value of their investment — in many cases, before they have fully explored their opportunities to significantly reduce their payments,” Coughlin said.
Citizens Bank conducted a survey of 501 U.S. millennials (ages 18-35) who are college graduates (2-year, 4-year, postgraduate, or professional degree) and currently have student loans. The custom survey was conducted online for Citizens by TNS from Feb. 10-22.
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