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9 Ways Student Debt Is Affecting Every Aspect of Americans’ Lives

·9 min read
Geber86 / Getty Images
Geber86 / Getty Images

Over half of American college graduates are graduating with some student loan debt, with borrowers owing a total of $1.48 trillion, according to the Federal Reserve. For many of these borrowers, the burden of repaying those loans affects their immediate and long-term financial situation. Many student loan borrowers delay major life milestones and are behind on retirement savings.

Read More: What Is Zero-Based Budgeting?

To find out just how much the student loan debt crisis is affecting borrowers’ lives, TD Bank surveyed over 1,000 Americans ages 18 to 39 who have paid off or are currently paying off debt from student loans — and the findings are alarming. Although Americans are clearly struggling with student loan debt, there are options with your payment plans and budgeting that might help you get your money in order.

Last updated: May 5, 2021

Business people working in the office.
Business people working in the office.

Most Borrowers Are Using One-Fifth of Their Income for Loan Repayment

The average student loan debt held by borrowers is $26,495, and the average monthly debt payment is $579, according to the TD Bank survey.

“With a reported average monthly take-home pay of $2,689, one-in-five dollars of take-home pay is spent on repaying student debt,” a press release on the data stated.

See: Reasons You’re Still Living Paycheck to Paycheck

Portrait of a group of students standing together on graduation day.
Portrait of a group of students standing together on graduation day.

Student Loan Debt Affects Americans for Years After Graduating

Most Americans with student loans — 61% — plan to need four years or more after graduation to pay back their college debt. And 24% expect to need 10 years or more to pay off student loans.

These findings indicate “that loan holders’ paychecks will be impacted for years to come,” the survey concluded.

Read More: 19 Ways To Tackle Your Budget and Manage Your Debt

Depressed woman at home.
Depressed woman at home.

Student Loans Are Making It Difficult for Many Americans To Save

Because most Americans with student loans are putting a significant amount of their paycheck toward debt repayment, they are finding it hard to save. The TD Bank survey found that 61% are saving 10% or less of their income per month — and 20% are not saving anything.

Discover: See the Full List of Money’s Most Influential and More

Focused male patient at physical therapy walking with the help of parallel bars and therapist next to him giving support.
Focused male patient at physical therapy walking with the help of parallel bars and therapist next to him giving support.

Many Millennials With Student Loans Don't Have an Emergency Fund

The survey also found that 43% of millennials with loans have delayed putting money aside in a rainy day fund. Not having a rainy day fund can ultimately end up costing them more — in many ways.

Discover: This Easy Trick Will Improve Your Credit Score and Avoid Late Payments

Paramedics taking patient on stretcher from ambulance to hospital.
Paramedics taking patient on stretcher from ambulance to hospital.

Not Having an Emergency Fund Can Put Americans Further Into Debt

Not having any savings in a rainy day or emergency fund can cause major financial issues if an unexpected expense pops up.

“In the short-term of forgoing savings, whether you’re a homeowner or not, there are unexpected things that happen in people’s lives — whether it be with their car or an emergency hospital visit — things that you need to pay for,” said Mike Kinane, head of US Bankcard at TD Bank. “And making sure that you have some level of a cushion to help weather those unexpected events is extremely important.”

“Especially with student debt, you’re trying to juggle a monthly debt burden on top of a car loan and rent and other things, and then this bump in the road could cause you to miss a payment or two,” he added. “That can cause even further damage to people’s credit and their credit history.”

Find Ways To Save: 14 Completely Free, Easy-To-Use Budget Templates

Portrait of cheerful man paying for order with credit card in cafe.
Portrait of cheerful man paying for order with credit card in cafe.

Student Loan Debt Makes Americans Rely More on Credit Cards for Everyday Expenses

The TD Bank survey found that 54% of respondents have maxed-out credit lines. This means they’re adding credit card debt on top of their student loan debt, and it can be hard to know how to prioritize paying off these debts concurrently.

Two gay men pay in bar  with credit card.
Two gay men pay in bar with credit card.

Credit Card Debt Should Be Prioritized Over Student Loan Debt

Although it’s important to keep up with student loan payments, Americans with student loan debt and credit card debt should prioritize paying down their credit card debt first, said Kinane.

“Typically, credit cards are going to be a higher-interest-rate debt, [so those are] the balances that consumers should think about first paying down,” he said. “Typically, what you’re seeing with student lending, they’re usually going to be lower interest rates — the ranges are in the single digits.”

“For credit card debt, if you’re paying the full rate APRs, those are typically in the teens or higher,” he added. “I think it’s important to focus on that higher-interest-rate debt and paying that down as aggressively as one can.”

Young women ordering food in busy Japanese restaurant, fun, night out, flirting.
Young women ordering food in busy Japanese restaurant, fun, night out, flirting.

Americans With Student Loan Debt Miss Out on Everyday Pleasures

Life experiences that you might take for granted aren’t affordable for some Americans with student loan debt. The survey found that 35% of respondents dine out less often, 60% don’t take vacations and 20% haven’t joined a gym.

Newlyweds holding hands in the backseat.
Newlyweds holding hands in the backseat.

Young Americans Delay Major Life Milestones Because of Student Loan Debt

The survey found that many millennials delay life milestones because they can’t afford them while paying back student loans. Over a third (36%) have delayed buying a home, 21% have delayed getting married and 26% have delayed having kids.

Brazilian couple smiling at each other on decking, woman in hammock, Sugar Loaf Mountain in the distance.
Brazilian couple smiling at each other on decking, woman in hammock, Sugar Loaf Mountain in the distance.

Many Young Americans With Debt Aren't Saving For Retirement

Many millennials with student loan debt are failing to invest in their financial future. Forty-one percent said they’ve delayed contributing to a 401(k) plan and 42% said they’ve delayed contributing to other investments.

Check Out: The Complete Guide to the Best Retirement Age

Two people are enjoying an intense climbing session at an indoor rock climbing centre.
Two people are enjoying an intense climbing session at an indoor rock climbing centre.

Why Delaying Retirement Savings Is a Mistake

Retirement seems far off to people in their 20s and 30s, but saving now for long-term financial health should be a priority at these ages.

“401(k) contributions are some of the most important investments that a young person can make, even though they may not realize it at the time that they’re making them, because of the ability of those dollars to grow tax-free over a very long period of time,” said Kinane. “Young people with student debt are thinking only about today, and I understand why that is, but they’re thinking about that instead of the long-term benefits of investing — even a very small amount.”

Kinane said that contributing just $10 a paycheck to a 401(k) or another retirement account can make a big difference over time.

“If you do that when you’re 22, 23, 24 years old, even $10 a paycheck starts to add up over a 30- to 40-year career,” he said. “Start out small with the intent that as you get a raise, as your lifestyle changes, as you’re able to pay off your student debt, you can increase that investment — but just getting on the train is the most important first step.”

male barista serving coffee
male barista serving coffee

Nearly Half of Americans With Student Loan Debt Wish They Had Made Different Choices

Forty-six percent of those surveyed said they would not have made the same decisions about their education and borrowing if given the chance to do it over. Of those who regret their student loan decisions, 15% said they would choose a less expensive school, 20% said they would have taken out fewer loans and figured out other ways to pay, and 11% said they would not have taken out any loans at all.

Young and determined black student studying at night at home, with a help of a laptop computer.
Young and determined black student studying at night at home, with a help of a laptop computer.

Americans Should Be Educating Themselves Before Taking Out Student Loans

Kinane believes that the fact that so many Americans have regrets about their student loan situation indicates that there’s a major issue with financial literacy around this topic.

“What was surprising to me was the lack of understanding of what the student debt is at the time [borrowers] are acquiring the debt,” he said. “A lot of students really didn’t understand what they were signing, what the interest rate was, what they would have to repay [and] when they would have to repay it.”

“Education when you’re actually at the table and needing to finance the next year, that’s a piece that I really encourage students to pay attention to,” he added. “[They should] lean on their network of friends and family that may have done this before, and go to banks and student lenders and really try to educate themselves on what their products are.”

Mid woman eating noodle.
Mid woman eating noodle.

What To Do If You're Struggling With Student Loan Debt

Unfortunately, many people are already struggling with student loans, and it’s too late to go back in time to do things differently. However, there are steps student loan borrowers can take to safeguard their financial future and lessen their burden.

Young businessman shopping online using credit card, smartphone and lap top.
Young businessman shopping online using credit card, smartphone and lap top.

1. Make the Minimum Monthly Payment Every Month, and Make It on Time

“Make sure you’re focused on making the minimum monthly payment,” said Kinane. “Focusing on making sure that those payments are made on time is really important because if you don’t, not only do you get late fees that could add to your debt, but you’re also creating a situation where your credit report is not going to look great.”

A lower credit score could make it harder to qualify for credit cards and could make you a less attractive homebuyer to prospective lenders. You might have to pay higher interest rates, or you might not get approved at all, Kinane said.

Read: Tips To Keep Your Finances in Order Without Sacrificing What You Want

Shot of a young woman shopping in a grocery store.
Shot of a young woman shopping in a grocery store.

2. Separate Discretionary and Nondiscretionary Spending

“Make sure you’re very careful about how you’re applying your paycheck,” said Kinane. “Make sure that the things your paycheck is going to first are things like student loan debt, utilities and car payments, and think about how you’re spending on all your credit cards.”

Kinane gave the example of having a Hulu account, Netflix account and cable subscription, and taking the time to think about if you really need all three.

“Just thinking through all of that, and assembling and organizing the payments you make every month from highest-priority to lowest-priority, you may [find that you’re] able to make some room there,” he said.

The mature adult African American bank officer helps the Hispanic mid adult female soldier understand the terminology in the loan application form.
The mature adult African American bank officer helps the Hispanic mid adult female soldier understand the terminology in the loan application form.

3. Consider Student Loan Refinancing

When you refinance student loans, you take out a new loan to cover all or some of your student loans. This could allow qualified borrowers to pay a lower interest rate.

“Look at banks and financial service organizations that offer student loan refinance opportunities,” said Kinane. “Look at current rates and look at where there may be opportunities to restructure the loan — there may be income-based repayment programs, and you [might be able to] get a lower monthly payment. I would suggest that consumers talk to different organizations to get a good understanding of what the landscape is for repayment and refinance programs.”

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This article originally appeared on GOBankingRates.com: 9 Ways Student Debt Is Affecting Every Aspect of Americans’ Lives