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Drowning in Debt


It’s been estimated that there’s a $1.2 trillion outstanding student loan debt in the United States. As it's often reported, the millennial generation is facing a student debt crisis. A recent Citizens Financial Group, Inc. survey polled 501 millennials who currently have student loans. Of the total participants, Citizens’ discovered that 57 percent regret the amount they borrowed. More so, 37 percent said they would have not gone to college if they had known how much it was going to cost them.

Going to college is a great thing. Recent college graduates shouldn’t have to question if they made the right decision by seeking a higher education.

Ten years ago, when I was a high school senior, I had no clue what college would cost. Skimming through some college brochures, I remember telling myself that $30,000 year for tuition was “cheap." Now that I’m more aware, I’ve quickly realized that there are millions of Americans who don’t even make $30,000 a year.

Using the $30,000/year tuition as an example, a person would be borrowing at least $120,000 for his/her 4 years of undergrad. To put things into perspective, a $120,000 is a 20 percent down payment on a $600,000 house. Here’s the kicker…your mortgage rate would be lower than your student loan interest rate. Don't forget room and board, textbooks, and other misc. expenses. Oh yeah, what about grad school?

Student loans is probably the number one cause that is preventing many of my clients from purchasing their first home. Nearly all of them have great credit and income, but they don’t have enough money for a down payment since a large portion of their paycheck is allocated to paying back their student loans.

A friend recently asked me, “Would you trade your student loans for a down payment on a house?” That’s a tough question since I value my education.

What would you do?

-RO

Sources: BusinessWire.com, MarketWatch.com.

Disclaimer: This is a personal blog. Ryan Oda (#RS-75450) is a licensed real estate salesperson with Benn Pacific Group, Inc (#RB-19423). The opinions expressed here represent my own and not those of Benn Pacific Group, Inc., its agents, and or its affiliates. My thoughts and opinions can change over time. This blog is intended to provide a semi-permanent snapshot of a selection of various thoughts and opinions that may not be the same, or even similar, to those I may hold today.

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#ryanoda #studentloans #millennial #personalfinance

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Ryan Oda (RB-23073) is a Real Estate Advisor with Forward Realty (RB-19423) in Honolulu, HI.