Today’s college student bears the weight of trying to succeed academically as well as his growing debt from student loans.
According to a new MagnifyMoney.com survey, nearly 40% of current students with loans have considered dropping out to avoid racking up more student loan debt. And of the students who thought about leaving before earning their degree, over half were more than $20,000 in debt.
It’s no secret that student debt is causing many individuals to consider whether their degree is even worth the financial stress. An analysis by The Hechinger Report revealed that 3.9 million people with student loan debt dropped out of college during the 2015 and 2016 fiscal years alone.
For fall 2017, total undergraduate enrollment dropped by nearly 224,000 students from a year ago, according to the National Student Clearinghouse Research Center. The center said it’s the sixth consecutive year of total enrollment declines and does not cite reasons, but our survey found financial concerns seem to play a role in student enrollments and dropouts.
The survey was conducted via Google Consumer Surveys’ online student panel from April 23-May 7, 2018. It included responses from 3,069 college students. Approximately 2,000 of respondents had at least some student loan debt.
Key findings: Work, kids add to financial strain
In our survey, 39% of our respondents with student debt said they have considered stopping college before graduating so their financial situation wouldn’t get worse. For those students, balancing school with part-time work was also a major worry, with more than half citing the juggling act as a main reason they considered quitting.
Nearly 45% of those who contemplated dropping out said they worked 20 hours or more per week, with 20% saying they worked more than 40.
Still, 35% of the students in our study who had thought about leaving weren’t working at all, signifying that loan debt is still a major stress for those who don’t earn extra money while in college.
Concerns such as children and expected income seemed to play a large role in these anxieties as well: 30% of students listed balancing work and family as a main reason they had thought about quitting, while 26% said they considered quitting because they were worried about not making enough in their chosen career field.
Debt amounts hit $50,000 and up
In addition to the 52% of our in-debt respondents who owed $20,000 or more, nearly 25% were facing at least $50,000 in total loans. Additionally, almost 10% owed $100,000 or more.
Loan structure varies widely among these students. Based on our survey, 48% of our respondents said they had at least some private loans, while 52% were exclusively using federal aid.
No one-size-fits-all plan for paying off debt
There was no clear favorite strategy for paying off debt. While 39% of people said they would use an income-based plan to manage their loans, 25% said they would use a standard repayment plan. Still, another 26% weren’t yet sure how they would deal with the debt.
Despite the stress caused by student loans, most of our respondents were generally positive about their job prospects after school.
Nearly half said they thought they would make at least $20,000 extra per year as a result of their degree, with 34% of them saying they expected to earn at least $30,000 extra.
Tips for dealing with student debt
Student loans don’t have to be such a headache, though. With the proper planning and preparation, students can work around the overwhelming costs of loan debt and keep the stress of repayment at bay from their daily lives.
Jeremy Wine, supervisor of student loan counseling services for Take Charge America, a Phoenix-based nonprofit credit consulting agency, shared tips for approaching the repayment process.
- Think ahead. As our survey shows, worrying about loans during college can be a major source of anxiety among students. Still, Wine said it’s best to set up a plan of action long before you put on your cap and gown. “Realize that it’s there and that it’s something you have to pay back,” he said. He added that a nonprofit loan counselor can help you lay out a set of repayment goals and a budget that fits your financial situation.
- Look at repayment options. If you have federal student loans, there are a number of flexible repayment options available to you. Contact your loan servicer to enroll.
- Don’t waste money. It may be tempting to use the loan funds on items such as a new computer or a car payment. Wine said it’s best to only use the money for tuition and fees, even if that means getting a part-time job to pay for the rest.
- Consider consolidation carefully. Student loan consolidation or refinance involves paying off each of your loans with a new loan. Refinancing your debt can help lower your interest payments and make your loans easier to manage. Typically, you’d take out the new loan with a private lender. Just know that if you refinance federal student debt with a private loan, you’ll lose access to flexible repayment programs offered to federal borrowers. There is a consolidation program available for federal loans specifically, however, which is another option.