Amid growing financial constraints, 44 percent of borrowers no longer believe the cost of higher education in the United States justifies the return on investment, according to a recent survey.
Amid growing financial constraints, 44 percent of borrowers no longer believe the cost of higher education in the United States justifies the return on investment, according to a recent survey.
Is the cost of education in the United States still worth it? Not according to 44 percent of borrowers, who believe education-related expenses today no longer justify the return on investment, according to a survey by personal finance firm Credit Karma.
More than two in five borrowers or 45 percent also anticipate becoming “delinquent” on their loans once the federal forbearance period concludes in October, the findings revealed.
In the three years since the federal government suspended student loan payments because of the pandemic, living expenses in the US have surged. Inflation rose to over 9 percent last summer, housing expenses have remained high in numerous cities, and credit card debt has reached record levels. Meanwhile, a greater number are tapping into their 401(k) accounts for additional funds.
Out of some 2,000 borrowers surveyed last month – including about 400 with federal student loan debt – nine out of 10 respondents with student loan debt expect to make adjustments to their lifestyle to manage their monthly payments.
About half of the respondents or 49 percent said they plan to cut down on non-essential expenses such as dining out and purchasing streaming subscriptions. Meanwhile, about 40 percent are set to take on extra work to supplement their income.
Just over a third of federal student loan borrowers are considering applying for income-driven repayment plans to alleviate their monthly loan burden, while others (26 percent) intend to tap into their emergency savings.
The return to student loan repayments
The average cost of tuition, fees, and room & board at a four-year institution for the 2021-22 academic year was approximately $30,000, based on data from the U.S. Education Department.
To assist borrowers who will return to making payments, the government has implemented a 12-month “on ramp” period. From Oct. 1, interest will accumulate, but missed payments on federal student loans during this period will not result in default or delinquency.
During this period, the government will refrain from reporting missed payments to credit bureaus or collection agencies, ensuring that borrowers’ credit scores remain unaffected if they are unable to make payments immediately.
