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With student loan debt reaching an all-time high of over $1.5 trillion, it is no wonder that growing consensus among students has emerged about the current student loan payback terms.
They are simply too demanding for us to handle realistically.
This feeling among college graduates has been long documented through different surveys and studies across the nation, where students revealed their immense monetary struggles due to paying off their lending fees, as well as dealing with tough interest rates and other fines associated with borrowing money from certain lenders.
Despite this sentiment being around for a while now, not much action or change in regards to the issues at hand has been done yet until now.
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3 in 4 Students Admit They Worry About Repayment But Still Overspend
The results of a recent survey showed that college students are deeply concerned with paying off their loans on time and at the right rate.
In fact, 3 out of 4 respondents admitted to worrying about their loan repayments but still continue to overspend on other items they deem as necessary, such as food or basic living costs.
20% Of Students Admit They Haven’t Had Paying Job Yet
To make matters worse, 20% of respondents admitted that they haven’t had any kind of paying job yet to help them start chipping away at their loan balances.
This trend is especially worrying given the increasing cost of college tuition and living expenses that students have to contend with every day.
Tackling Student Loan Debt With New Strategies
In response to this worrying trend, many financial experts advocate for new strategies to tackle student loan debt better.
For instance, creating a budget and sticking to it can be an effective way to help manage finances and pay off your loans on time.
Financial Aid Options to Consider
Moreover, students should also take the time to explore other financial aid options that are available.
Government grants, scholarships, and even private student loans can all help relieve some of the burden associated with student loan debt.
There Is A Disconnect Between Actions And Circumstances
It is important to note that there can sometimes be a disconnect between our actions and the circumstances around us.
Despite our best efforts, unexpected expenses or income changes can arise at any time.
It is important to stay mindful of these potential changes and adjust accordingly when needed.
Admit to Being Able to Save More
In an ironic twist, 53% say they could save more money monthly.
This extra savings could help with student debt repayment so they are free of this burden sooner, or it could go to having a financial cushion in the event of an emergency.
Yet, even with this understanding, they choose not to save.
Understanding The Disconnect
The reality is this generation has an awareness of smart financial decisions, otherwise, they wouldn’t be able to admit to being able to save more.
But their actions tell a different story.
Even though they know what to do, they don’t.
Some believe the reason is simple: Social media.
When scrolling through their feeds, young people see the glamorous lives of others, thinking it is reality when, in fact, it isn’t.
They fall victim to FOMO and end up buying without realizing they are digging themselves a deeper hole to get out of.
Admit to Overspending
On the bright side, this generation at least admits to overspending.
Overall, 81% of students say they spend more than $100 every month on non-essentials, 43% spend more than $250 each month, and 17% say they spend more than $500 a month.
Breaking down where they spend the most money, you will see some common areas where many people overspend.
Here is where they say they spend more than $100 every month:
- Dining Out: 65%
- Clothing: 58%
- Entertainment: 47%
- Travel: 21%
- Alcohol: 13%
- Gambling: 7%
- Drugs: 5%
The most surprising are the bottom three: alcohol, gambling, and drugs, typically an outlet when you aren’t happy.
Steps for Improved Finances
So what should they do?
The first step is accepting where they are.
They need to write down all their debts, how much they make, and then track their spending so they can see where their money is going.
Then, they need to set up a plan to get out of debt.
While doing this, they should also consider a side hustle or figure out ways to increase income while also decreasing spending.
Doing this will speed up the debt repayment process.
Finally, they need to understand what they value in life.
In other words, what brings them joy?
If it is traveling, cut out the other wasted spending and put some money towards travel.
This will allow them to be happier while improving their financials at the same time.
56% of Students Think Student Loan Repayment is Unfair
Yes, 56% of students claim having to repay their loans is unfair.
Breaking this down further, 31% say making repayments is ‘somewhat unfair,’ and another 21% say repayment is ‘very unfair.’
On the one hand, I can see where they are coming from.
You are 18, have no clue about personal finances, and take out these giant loans you must repay.
But on the other hand, they have to know they will need to repay them.
When I took out student loans, I knew I had to repay them. I was even told this.
To think that repaying a debt you took out is unfair goes against common sense.
What’s next? Thinking paying for groceries is unfair, too?
Lots of Debt
It isn’t only student loan debt they are struggling with.
Thirty-two percent have credit card debt, and 23% have a car loan.
Overall, 71% say they have some form of debt.
Growing up is part of life. Sadly, most schools don’t teach personal finance, so adulting when it comes to money can be complicated.
Luckily, here is a guide to adulting so you can more easily figure things out, without making major mistakes.
How to Get Out of Debt
If being in debt wasn’t bad enough, trying to dig yourself is worse.
Combine the setbacks you face and the time it takes, it’s no wonder many people feel trapped.
But there is hope.
Here is how to get yourself out of debt once and for all.
How To Move Out With No Money Or A Job
Are you looking to change your situation and move but you don’t have any money?
Or worse, do you also not have a job? You might think your goal is hopeless, but it’s not. Here are the steps you need to take.
Dave Ramsey’s Baby Steps
Using Dave Ramsey’s Baby Steps is great for getting your finances back on track. But you could do better with a few simple tweaks to his system.
I Need Money Now
Do you every say to yourself, ‘I need money now?’
Whether it is for bills or unexpected expenses, here is how to get cash fast.
In many cases, you can have cash in your hands the same day.
Survey results provided by Intelligent.
I have over 15 years experience in the financial services industry and 20 years investing in the stock market. I have both my undergrad and graduate degrees in Finance, and am FINRA Series 65 licensed and have a Certificate in Financial Planning.
Visit my About Me page to learn more about me and why I am your trusted personal finance expert.