One of the most concerning parts of carrying student debt isn’t just the interest and principal balance. It’s the time lost.
Education debt is a thief of time.
In wealth building, the earlier you start saving and investing, the more you can have for your later years.
When you spend your 20s, 30s and even 40s servicing a heavy load of loans, you are losing the most powerful years of compound growth.
By the time borrowers clear their education loans and finally feel financially ready to save, they’ve missed an early window to get started on building wealth.
A pair of reports released Tuesday by Gallup and the Lumina Foundation put into perspective the cost of a college education for current students, alumni and those without a degree.
The data shows a catch-22 for the American worker. Most people — about 73 percent — believe getting a college degree is just as vital for success today as it was 20 years ago. For many jobs, the credential is a gateway to employment. Yet many people feel locked out because of cost. Only 1 in 4 adults without a degree thinks college is within financial reach, a staggering 10 percentage point drop since 2023.
For those who pressed forward, the burden of taking on debt to get an education is impacting other life choices.
According to the Education Data Initiative, the average annual cost of attendance for the 2022-2023 academic year was $27,146 for in-state students at public four-year universities, totaling $108,584 over four years. Out-of-state students averaged $45,708 annually, for a four-year total of $182,832. Students at private, nonprofit universities paid an average of $58,628 per year, for a cumulative investment of $234,512.
Each year, 85 percent of new undergraduates borrow money to pay for college, and the average borrower spends close to 20 years paying off student loans, according to the Education Data Initiative.
With costs so high and the aftermath entailing decades of financial strain, many borrowers are delaying life milestones, such as homeownership and retirement savings. This creates a ripple effect across the broader economy, as a generation of young adults delays building wealth.
More than 80 percent of borrowers with outstanding student debt worry about making their payments. These delays are occurring even among borrowers with smaller loans. About 1 in 3 graduates who borrowed less than $10,000 report having delayed at least one major life event.
You may be thinking: $10,000 is not that much money. But even that amount of debt for a student coming from a low-income household can impact other financial decisions, according to Courtney Brown, vice president of impact and planning at the Lumina Foundation.
It’s about financial fragility, Brown said.
“People with smaller loan balances are often lower income, they’re more financially stretched,” she said. “When you don’t have a lot of resources, that small loan, that payment is competing with rent, with child care, with food. And so it does feel risky to take on some other milestone, whether that’s a mortgage, have a child … buy a car. You don’t want to add yet another monthly payment.”
There are those who will fiercely debate that college may not be worth it anymore. According to a May 2024 Pew Research Center survey, 29 percent of U.S. adults thought a four-year college degree was not worth the cost. Close to half say the cost is worth it only if someone doesn’t have to take out loans.
It’s not particularly useful to claim college isn’t worth it when we know that many employers screen out applicants without a degree.
In another survey released earlier this year, Gallup and the Lumina Foundation found that about half of employers believe most jobs in their organizations require a college degree to succeed. About three-quarters of employers say they would prefer candidates to have an associate or bachelor’s degree, even for jobs where it’s not required.
I recently had two encounters that were troubling to me.
I was at a luncheon where I was seated next to a very engaging freshman. Although she had been offered a full ride at one college, she persuaded her parents to let her attend a school that led them to take on debt.
I asked her how much in loans her middle-income parents had to take out.
“Oh, we don’t discuss that,” she said, abruptly shutting down this part of our conversation.
What in the heavens?
Not long after that encounter, a woman approached me at church seeking advice about her finances. She was a single mom. She had been struggling with credit card debt and other loans. And she was worried about the money she would need to borrow to get her children through school. One kid was already in college, another heading there in the fall — both of them out-of-state.
“Can you afford that?” I asked.
“No,” she said.
Then the tears came.
“I just wanted them to go to a school where they would feel comfortable,” she said softly.
I understood. But when pressed, she admitted the financial burden could break her.
I simply said, “So, it’s okay for them to be comfortable if it makes you financially uncomfortable for decades?”
The burden of student loans is falling on parents and students, which means the opportunity cost of carrying that liability for decades has to be part of the college affordability conversation and factored into the college choice. If debt isn’t strangling the graduate, it can be a financial breaking point for parents.
The Lumina and Gallup findings show Americans haven’t lost faith in the value of a degree, but they are rightly terrified of the cost.
A degree is supposed to be an investment in your future, not a mortgage on it.
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