How does student loan debt impact students and their families?

Date: 03-01-2023

The consequences of rising student loan debt are felt by everybody – students, families, and the society at large.

Many parents feel that it is their moral obligation to provide good higher education to their children. However, their financial situation is on shaky grounds. Hence, more and more parents are felling trapped. In spite of this many families try and make college work at any cost. With today’s college costs and earnings potential post-graduation, the reality is that many parents are making a risky gamble that their significant investment today will lead to a better life for their kids in the future. Thus, when students do not graduate or do not end up with a well-paying job, parents and families are impacted as well.

A lot of struggling families burdened with student loans are forced to make tough choices. They make regular financial tradeoffs by prioritizing student loan debt over other consumer debts such as mortgages, auto loans, and credit card debts. Apart from financial issues, there are health and relationship issues as well. Unfortunately, in some cases, student loan debt has become a thorn in the relationship between parents and their kids through college and some times long after the kids have graduated from college.

Student loan is a very sticky form of debt and it is almost impossible to get out of it without paying it off in full. As a result, students who graduate with student loan debt will feel the impact of it for years after graduation. Student loan debt impacts students in multiple ways. Many students with high student loan debt are compelled to take a sub-optimal job after graduation because they are worried that they need to start servicing their student loan debt. Many students have difficulties buying a car or buying their first home. Nearly 50% of the students have reported that a high student loan debt has impacted their credit score. This in turn has resulted in failed credit check for apartment applications for some students. Few students have also reported having wages or social security benefits garnished because of student loan obligations. Furthermore, research has shown that having student loans has discouraged students from even making retirement contributions.

This student loan burden has impacted student’s personal lives as well. Many impacted students had to delay life decisions such as getting married or starting a family. The stress and anxiety that can come with a student loan debt can wreak havoc on a student’s health. Many student loan borrowers experience mental health challenges due to the amount of debt they owe. In some extreme cases, students suffer from depression as well.

Finally, we need to understand that there will be repercussions to the overall national economy as well if student loan payments crowd out household spending.