NerdWallet's 2017 Report

Student Loan Sentiments and Sacrifices

By Teddy Nykiel and Victoria Simons

About half of student loan borrowers, or 47%, have missed a payment, including 18% who have skipped a payment to buy groceries, according to an online survey conducted by Harris Poll among more than 2,000 U.S. adults on behalf of NerdWallet. And yet 53% of borrowers don’t even think their student loans were worth it.

The survey results provide tangible examples of what it’s like to be one of the 44 million Americans with student loan debt. Many are stressed, frustrated and stretched thin financially as they juggle other debts, and often are forced to make tough choices: Get the car fixed or make a student loan payment? Pay the mortgage or the student loan bill?

“Many borrowers feel it’s impossible for their paycheck to cover both student loan bills and everyday necessities,” says Brianna McGurran, NerdWallet’s student loan expert. “But they should know there are repayment options available that can take the pressure off.”

Key findings

  • Nearly half of student loan borrowers have missed a payment: 47% of student loan borrowers, including 58% of millennial borrowers — those ages 18-34 — have missed a payment for reasons including buying groceries and covering an emergency expense.
  • Many borrowers prioritize paying other debts above student loans: 42% of student loan borrowers also have other forms of debt, and 68% say they’re focused on paying off their other debt first.
  • Making sacrifices to afford student loan payments is common: 65% of all student loan borrowers and 60% of those whose total household income is $100,000 or more annually say they’ve made a sacrifice to make student loan payments.
  • Millennials and parents, more than other groups, say student debt isn’t worth it: 53% of student loan borrowers say that their debt isn’t worth the education they received. That number is higher among millennial borrowers (66%) and borrowers who are parents with kids under 18 living at home (72%).
  • Men are more likely than women to have a positive attitude about student debt: Male student loan borrowers are more likely than female borrowers to say managing student debt is satisfying (28% versus 12%). Women are more likely than men to say it’s stressful (49% versus 33%) and/or frustrating (44% versus 26%).

Many borrowers feel it’s impossible for their paycheck to cover both student loan bills and everyday necessities.

Brianna McGurran, NerdWallet’s student loan expert

Why student loan borrowers miss payments

Forty-seven percent of student loan borrowers, including 58% of millennial borrowers — those ages 18-34 — have missed a payment. Eighteen percent of borrowers have missed a payment to pay for groceries, and 18% have missed one to cover an emergency expense.

“If you have to choose between buying groceries or getting your car repaired and paying your student loans, look into switching to an income-driven repayment plan,” McGurran says. Income-driven plans, which are only for borrowers with federal loans, cap borrowers’ payments at 10% to 20% of their incomes and offer forgiveness after 20 or 25 years.

Some borrowers say they’re not stressed about student loans. While 47% of borrowers have missed a student loan payment, only 41% report being stressed about managing them. The contrast is starker among millennials: 58% have missed a payment but only 45% say they’re stressed.

That could be because borrowers have other debt payments to worry about. Forty-two percent of student loan borrowers also have other forms of debt, and 68% of borrowers say they’re focused on paying off their other debts first. In other words, two in five are stressed about student loans, but many may be even more stressed about their other debts.

Ideally, borrowers would never miss any debt payments; doing so can hurt your credit and get you slapped with late fees. But cash-strapped borrowers are generally right to prioritize other debt payments above their student loan payments if the other debts have higher interest rates. For instance, if they have a student loan that has a 6% interest rate and a credit card balance with a 15% interest rate, focusing on the credit card payment is the right financial move.

Student loan sacrifices: What borrowers give up to pay their debt

Sixty-five percent of borrowers say they’ve had to make a sacrifice in order to make student loan payments. Among borrowers who are millennials or live with children in their home, that percentage is higher — 72% and 71%, respectively.

Even borrowers with relatively high household incomes make sacrifices. Sixty percent of borrowers whose household income is $100,000 or more annually say they’ve made a sacrifice to make student loan payments. That’s close to the 63% of borrowers whose household income is less than $50,000 per year and say they’ve made a sacrifice.

Thirty-four percent of borrowers have limited their social life by cutting back on dinners out, events and activities; 29% have saved less for emergencies; 27% have limited or eliminated travel, including trips home to see family; and 27% have saved less for retirement.

But many borrowers likely can’t afford to skimp on savings. Thirty percent of Americans and 43% of millennials say they aren’t saving for retirement at all, according to a November 2016 NerdWallet survey. And if borrowers were to bulk up their emergency savings, they could be less likely to skip a student loan payment the next time their car requires a pricey repair.

Millennials and parents, more than other groups, say student debt isn’t worth it

More than half, or 53%, of borrowers say their debt isn’t worth the education they received. That sentiment is stronger among borrowers who are millennials and parents with kids under 18 living at home.

Sixty-six percent of millennial student loan borrowers (ages 18-34) say their debt isn’t worth it, compared with 52% of Gen X-ers (ages 35-54) and just 25% of baby boomers (ages 55 and older). And 72% of borrowers who are parents with kids under 18 at home feel that way, compared with 39% of borrowers without children living at home.

One reason borrowers may not think their student debt was worth incurring could be that they feel blindsided by loan interest, says Alexander L. Brown, an associate professor at Texas A&M University who studies behavioral economics. When borrowers who were unaware of or unable to calculate loan interest learn how much accumulated interest has increased their total loan balance, “they feel like they’ve been tricked or conned,” he says.

Attitudes about student debt

Stress, frustration and annoyance are the most common feelings about managing student loans that borrowers cited. They chose “stressful” 41% of the time and more than any other sentiment to describe their feelings about managing their student debt. But paying off other debts seems to be more top of mind for most, as more borrowers with other debt — 62% — strongly or somewhat agree that they feel less stressed about paying off their student debt entirely than they do about paying off their other debts.

It isn’t gloom and doom for everyone, though. Twenty percent of borrowers, or one in five, say that managing their student loans is “satisfying.” This was the fourth most popular word that borrowers chose.

Paying off loans makes borrowers “feel as if they achieved something,” Brown says.

Ten percent of student loan borrowers say that managing student loans is embarrassing. Borrowers who didn’t graduate from college are twice as likely to feel embarrassed (14%) than those who did earn a degree (7%). But overall, student debt is less taboo than other types of debt: 69% of student loan borrowers say they’d be more comfortable talking about their student debt with their peers than their other forms of debt.

Male student loan borrowers are more likely than female borrowers to use positive adjectives — satisfying (28% versus 12%), rewarding (15% versus 7%), gratifying (15% versus 7%) and empowering (12% versus 6%) — to describe their feelings about managing student debt. Female borrowers are more likely to choose negative adjectives — stressful (49% versus 33%) and frustrating (44% versus 26%).

That gender difference isn’t surprising, Brown says. “Men generally survey as being more risk-tolerant and confident,” he says, citing a 2009 paper in the Journal of Economic Literature that discusses gender differences — including risk tolerance — in economic experiments.

Another NerdWallet survey, which focused on student loan regrets, revealed a gender divide, too. In the November 2016 survey, women were more likely to say they needed the student loans they took out: 54% of men said they could have borrowed less, compared with 43% of women.

Planning how to repay student loans

While only 13% of student loan borrowers report feeling confusion about how to manage their debt, 74% of borrowers say it would have been helpful to get assistance in planning how to repay their student loans. Those borrowers should know about the following repayment options:

Income-driven repayment plans: Borrowers with federal student loans can get lower monthly payments with these plans, which cap payments at 10% to 20% of the borrower’s income and offer loan forgiveness after 20 or 25 years. However, the plans also increase the total amount of interest that borrowers pay throughout the life of the loan. There are four income-driven plans to choose from, and borrowers can use the Department of Education’s repayment estimator to learn which plan is best for them.

Student loan refinancing: Borrowers with good credit, or a co-signer, may be able to refinance through a private lender to get a lower interest rate. Lenders typically require a credit score at least in the mid-600s, but borrowers with higher scores are more likely to qualify for the lowest rates. Both private and federal loans can be refinanced, but borrowers who refinance federal loans lose access to federal loan benefits like income-driven repayment plans and loan forgiveness programs.

Teddy Nykiel is a staff writer at NerdWallet, a personal finance website. Email: teddy@nerdwallet.com. Twitter: @teddynykiel. Victoria Simons is a data associate at NerdWallet. Email: vsimons@nerdwallet.com.


METHODOLOGY

This survey was conducted online within the United States by Harris Poll on behalf of NerdWallet from Feb. 7-9, 2017, among 2,171 U.S. adults ages 18 and older, among whom 525 pursued a degree beyond high school and borrowed an average of $19,987.90 each in student loans.
For the purposes of the survey, student loan borrowers are defined as U.S. adults age 18 and older who have borrowed money in student loans for higher education (i.e., undergraduate and graduate school). This online survey is not based on a probability sample and therefore no estimate of theoretical sampling error can be calculated. For complete survey methodology, including weighting variables, please contact Megan Katz at mkatz@nerdwallet.com.