Though a majority of college graduates carry some amount of student debt, it isn’t dire enough for them to alter their post-graduate lifestyle.
A survey from Citizens Bank that highlighted the advantages of loan refinancing found that only 54 percent of borrowers limited travel to meet their monthly loan payments.
Furthermore, 50 percent limited their spending on clothing, 46 percent limited entertainment and social spending, 45 percent limited dining out, and 40 percent reduced their rent or mortgage payments.
That might sound like graduates face a monetary squeeze, but it’s great news. It’s a reflection that most borrowers can live without a radical reduction in their standard of living. Youth, after all, tends to be when people live closest to the poverty line. If graduates rarely have to scale back on Thai food or downgrade their apartments, it’s a sign that their debt is manageable. Scrounging for ramen money belongs to the freshmen, not the graduate.
Some people, however, don’t see the survey results in such a rosy light.
“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,” Brendan Coughlin, president of consumer lending for Citizens Bank, said in a press release.
That’s not quite true, however. Research from the Pew Research Center indicates that almost 90 percent of millennial graduates “say college has been, or will be, worth the investment.” A college degree still carries an earnings premium that justifies loan amounts. Most of the six-figure student debt belongs to future lawyers and doctors whose high incomes keep those eye-popping figures manageable.
Millennials with student debt who aren’t satisfied with their college decision tend to be dropouts who would’ve been better off not enrolling, or completing a degree to make the expense worthwhile. Those former students, who had difficulty making tuition payments, whose high schools didn’t prepare them, or who found they didn’t fit in the post-secondary system, struggle. Their prospects are less robust, and their economic situations more dire, than graduates.
College graduates, after all, aren’t even a majority of millennials. Only 34 percent of millennials hold a college degree. Of those 34 percent, roughly 70 percent graduated with student loan debt. Post-grad millennials are comfortable; their salaries are higher, more of them hold a mortgage, and more are married. The dropout borrowers, who tend to get ignored in policy debates, are more likely to struggle with low earnings and debt that’s difficult to repay.
Graduates with debt, unlike their less academically successful peers, live relatively comfortable lives. Sure, lingering debt takes some of their income, but by most metrics, they’re comfortable.
