The average student loan payment is $393. That’s a major expense in and of itself — but as most borrowers know, the real cost of student debt is much higher than their monthly bill.
Student loan debt holds borrowers back from milestones and goals in all aspects of their lives. And as a new study reveals, one major life event that is especially hindered by student debt is that of becoming a homeowner. According to the report:
- 51 percent of non-homeowners say their student debt has delayed their decision to buy a home
- 60 percent of non-homeowners making more than $100,000 per year say their student debt has delayed their decision to buy a home, compared to 48 percent of those earning under $50,000
- 47 percent say their student loans prevent them from saving for a down payment; 45 percent say their debt-to-income ratio is too high to qualify for a mortgage
- Nearly a quarter of all borrowers live with friends or family
- If they no longer had student debt, 24 percent of all non-homeowner borrowers would use the freed cash to purchase a home
What would you do without student loan debt?
Student loans can open the door to better career opportunities and financial stability. But it’s also clear that all too often, they close the door to major life events. And it’s not just homeownership: the study also found that 26 percent of borrowers haven’t started saving for retirement, 33 percent have put off going back to school, and 14 percent have delayed starting a family because of their student debt.
How we can help
The emergency federal student loan payment freeze has created some leverage for borrowers over the last eighteen months. But repayment will resume before we know it, and preparing now is key to managing your student debt — and getting closer to other financial and personal goals — come January 31.
Not sure how to get started? Here are a few ideas:
- Reconnect with your servicer. Keep an eye out for communications from your student loan servicer, as many are undergoing changes ahead of the end of payment suspension. You may also need to reconnect a payment method, reactivate automatic bill pay, or update your mailing address if you relocated during the pandemic.
- Review your repayment plan. Our Reassess tool makes it easy to find, compare, and enroll in alternative federal repayment plans, which could lower your monthly payment and get you on track for forgiveness.
- Make extra payments. The interest rate for federal student loans is still at 0%, so any payments you make now will apply directly to your principal balance — and that could mean becoming debt-free sooner. Check out Auto-Crush to set up extra monthly contributions and Giveback and Round Up to convert cash back rewards and spare change into budget-friendly student loan payments.