(Photo via TD Bank)

TD Bank Survey Finds Americans Spend More Than 20% of Their Take-Home Pay on Student Loan Debt, Impacting their Long-Term Financial Health

Originally posted on newscenter.td.com.

The student debt crisis is dominating the headlines, especially ahead of the 2020 elections with many candidates discussing what to do about the $1.56 trillion in debt facing 45 million borrowers across the nation.  Regardless of future policies, today’s young adults say their loan payments have a dramatic impact on their day-to-day finances, putting their longer term financial health in question, according to TD Bank’s Student Debt Impact Survey.

TD Bank’s survey asked more than 1,000 Americans who paid off or are currently repaying student loan debt, ages 18 – 39, how this debt impacts their lives and the factors they considered before taking out the loan.

The findings clearly show that debt for higher education is significantly affecting consumers’ current and future financial security. In fact, the average total student debt held by those surveyed is $26,495, with the average debt payment at $579 a month. With a reported average monthly take home pay of $2,689, one-in-five dollars of their take-home pay is spent on repaying student debt.

Furthermore, 61% of respondents expect to repay their student loans for four or more years after graduating, while 24% expect to repay their loans for 10 years or more, indicating that loan holders’ paychecks will be impacted for years to come.

No Way to Save for a Rainy Day

The financial burden of student loans is also significantly hurting Americans’ ability to save and invest. Six-in-ten respondents (61 %) save 10% or less of their income per month – 20% are not saving anything each month.

“The results of our survey show that student loans can have a ripple effect on borrowers’ financial futures,” said Mike Kinane, Head of US Bankcard at TD Bank. “Consumers owe money before they even earn their first paycheck, which is troubling.”

Beyond saving, Americans with student loan debt also face financial stress when it comes to daily expenses like grabbing a meal out or hitting the gym. Because of student loans:

• 54% of respondents say they have maxed out credit lines
• 35% dine out less often
• 60% do not take vacations
• 20% haven’t joined a gym

Perhaps most telling about the pressures of repaying student loan debt: nearly half of Americans surveyed (46%) reported they would not make the same decision about their education if given the chance. Of those, 15% stated they would choose a less expensive school; 20% would take out fewer loans and pay for the rest a different way; and 11% would not take a loan at all.

Failure to Launch 

Borrowers say they delayed traditional markers of adulthood to manage the financial strain caused by student debt. Millennials have been accused of shaking up the housing market and favoring unconventional marriage practices and family lifestyles. Student loans may play a role – TD’s survey found that due to student loans, millennials delayed the following:

• Buying a home (36%)
• Contributing to a 401(k) plan (41%), a rainy-day fund (43%) or other investments (42%)
• Getting married (21%)
• Having kids (26%)

“The reality is many Americans need to take on student loan debt to finance higher education, but most are unaware of how it will impact their lives for the long-term,” Kinane said. We’re seeing an alarming lack of education surrounding student loans, repayment terms and borrowers’ earning potential after graduation.”

TD’s survey found student loan borrowers overwhelmingly lack education about the impact of loans on their credit health, as well as how to keep up with payments and save for the future.

“Unfortunately, in many cases, we’re having these conversations with borrowers after they’ve already accumulated significant student loan debt and are seeking another financial step such as obtaining a credit card, a mortgage or a personal loan,” Kinane said. “In some cases, student debt will prevent a consumer from taking that next financial step. The conversation around repayment is more important than the conversation around obtaining the loan, but young consumers aren’t getting this information when they need it most. Prospective borrowers should carefully weigh the current cost of education with their future earnings potential and outlook.”

Survey Methodology
The study was conducted by research company Maru/Matchbox. Respondents were composed of a nationally representative sample of 1001 American panelists, aged 18 to 39 who pursued tertiary education. A random sample of this size would have a margin of error of +/- 3.1 percent. The survey was fielded from June 17th and 27th, 2019.

About MARU
Maru/Matchbox is a professional services firm dedicated to improving its clients’ business outcomes. It delivers its services through teams of sector-specific research consultants that have technology in their DNA, specializing in the use of Insight Community and Voice of Market technology. Maru/Matchbox research drives decision-making across all aspects of customer experience, including innovation, product, branding, commercialization and communications.

Latest News

Inherent Racism Revealed in COVID-19 Vaccine Trials; Texas Sheriff Charged in Death of Javier Ambler While in Police Custody; AOC Attacks Trump Over $70k Spent on His Hair; and More

Major COVID-19 vaccine trials currently underway lack racial inclusion. The research being carried out in search of a vaccine for COVID-19 contains a startling lack of diversity, according to a new story from Fast Company’s Kristin Toussaint. While the stats on COVID-19’s attack on people of color continue to alarm…

Anti-Asian Racism in the United States Continues to Soar as a Result of Attitudes Over COVID-19; the Myth of ‘Defund the Police’; and More

Pandemic continues to cause soaring levels of anti-Asian racism. It was only a matter of time: the White House’s constant referral to COVID-19 as the “China Virus” has indeed caused a tidal wave of continuing racism against people of Asian ancestry, according to a new report published in the American…

Biden Stands by His Commitment to LGBTQ rights; Cost of Racism in the U.S. Tops $16 Trillion; Black and Latinx Continue to Die from COVID-19 at Nearly Twice the Rate of Whites; and More

Biden reaffirms commitment to LGBTQ rights; promises to pass Equality Act. Democratic presidential nominee Joe Biden doubled down on his promises to the LGBTQ community while speaking at a presidential town hall for the Human Rights Campaign Foundation on Sept. 24. “You deserve a partner in the White House to…

degeneres, work, show

Leadership Lessons to be Gleaned from Ellen DeGeneres’ Toxic Workplace Scandal

Ellen DeGeneres began her daytime talk show’s 18th season with an apology after a summer of allegations against her that claimed her show promoted a toxic work environment rife with racism, sexual misconduct and other mistreatment. In August 2020, three senior producers — executive producers Ed Glavin and Kevin Leman…

COVID entrepreneur

Explosive New Growth in Small Businesses Due to COVID-19; America’s Police Force is Not Becoming More Diverse Despite BLM Movement; the Best and Worst Performing States in the 2020 Census; and More

Even with incredible nationwide unemployment rates, the creation of new small and diverse businesses has exploded due to COVID-19. Finally some news coming out of our pandemic: The Philadelphia Tribune reports that as bars and restaurants closed and stay-at-home orders were put into place earlier in 2020 to help fight…

Justice for Breonna not served; The essential rule of politics; Teen serves two months in jail for not doing homework; and More

Justice for Breonna not served as grand jury indicted officer who shot her with wanton endangerment — but not murder. “Outrageous and offensive.” Those were  by attorney to the family, Ben Crump to describe the grand jury’s decision in the March 13 fatal police shooting of 26-year-old Breonna Taylor. While…

IBM, EEOC, age

EEOC Unearths Years of Intentional Age Discrimination within IBM

After a long investigation, the Equal Employment Opportunity Commission (EEOC) has revealed that IBM leaders had directed managers to replace older workers with younger ones. Between 2013 and 2018, nearly 86% of those considered for layoffs within the organization were older employees over the age of 40. The investigation showed…