Many Americans grow up with the idea that college is a valuable endeavor to strive for, however, the rising costs of higher education make it difficult for the majority to afford it. Student loans have become a commonplace way for many to be able to go to college and potentially better one’s opportunities, but what happens when it’s time to pay off those loans and one is struggling with low entry-level pay and accumulating interest?
Are student loans still worth it at that point? According to a new study from YouGov, more than one-third of those with student loans felt that taking on debt was not worth the education they received. Ameritech Financial, a document preparation company that assists student loan borrowers with applying for income-driven repayment plans (IDRs), believes that fewer people would regret taking out their loans if they were more aware of their repayment options.
“It’s unfortunate that students have to take out loans in the first place,” said Tom Knickerbocker, Executive Vice President of Ameritech Financial. “But it’s even worse to go through college and come out feeling like it wasn’t worth it and now you have a substantial amount of debt to boot.”
Being able to graduate college debt-free would probably change those statistics. When student loan borrowers graduate, however, they face the reality of having to start paying off their loans. The average student loan borrower graduates with $37,172 of debt, with the average monthly payment being over $300. That’s a significant amount of money to be spending monthly in addition to other living expenses. Many degrees, despite the cost to receive them, don’t lead to high-paying jobs, compounding the problem. In a Gallup poll, 36 percent of respondents said they would choose a different field of study due to the low pay in the chosen industry.
In addition, 37 percent of all the YouGov respondents reported they were pessimistic about ever being able to pay off their loans. This view was particularly high among 35- to 54-year-olds; 46 percent of them felt they would be unable to see an end to their student debt. No wonder many of them felt the debt wasn’t worth the degree.
For federal student loan borrowers who may feel pessimistic about their ability to pay off their debt, IDRs may offer some hope. By taking into account a borrower’s discretionary monthly income and family size, monthly payments can be reduced to a more manageable amount while still paying down their balance. After 20 to 25 years of qualifying payments, their loan could potentially end in forgiveness.
“College is a huge commitment that requires a lot of sacrifice from students,” said Knickerbocker. “They shouldn’t feel like it was all for nothing, or like they’re still sacrificing so much of their lives after graduation. Income-driven repayment plans can help turn that pessimism to optimism: there is an end in sight to student loan debt.”