What is the practical cost of student loan debt, and what does a graduate have to earn to live in these four U.S. cities, on average, with and without a loan?
Are you debating whether to take on student loans to help pay for college or grad school? Are you questioning whether student loans are even worthwhile in the long run? The advantages of student loan debt has been widely debated for years, long before the past couple of election cycles.
We decided to take a different approach to this question by looking at what life is like with and without student loans, and the practical cost of living in four great U.S. cities to see how student debt impacts lifestyle.
Student loans are what some people like to call a necessary evil because most people need them to help pay for college. The evil is the resulting monthly payment you have after finishing college. For the academic year 2020-2021, the annual private school tuition was estimated to be $37,600, while public school tuition was around $9,400. Therefore, the total tuition cost for four years of education comes to $150,400 for private and $37,600 for public schools.
Even if you consider scholarships and grants, many students will have difficulty paying for college without going into debt.
Most people who have earned college degrees earn a higher lifetime income. Studies show that those with a college education have 57% higher earnings compared to high school graduates. In many instances, the advantages of a college education outweigh the disadvantages of living with student loans. This is particularly true if the anticipated annual salary for a person with your degree is greater than the entire amount of student loans you have taken out.
A significant risk here, however, is not being able to find work in your chosen field of study, in which case your earnings would almost definitely be lower than anticipated. Additionally, if you change careers and need to go back to school, this would seriously impact your ability to get by financially.
Student loans can assist college students and recent graduates in building their credit records and credit score when responsibly utilized. By responsibly making your student loan payments each month, you show potential creditors that you are at low risk of defaulting on future loans, including a mortgage, auto loan, and more.
If you were to take out a student loan that you cannot pay back, this will harm your credit, make it harder to qualify for financing, and the interest rate will be much higher, costing you more money in the long run.
According to the Federal Reserve, the average monthly student loan debt payment is $393. This monthly payment makes it difficult for many people to buy their first home. The Fed noted that “a $1,000 increase in student loan debt lowers the homeownership rate by 1.5 percentage points.” This is based on those who attended a four-year public school. If we take the median student loan debt of $17,000, this delay comes out to roughly 3.5 years.
Student loan debt even deters some from marrying and starting families because they don’t want a debt burden hovering over them as they take on familial responsibilities.
