By Adam Hunter
Caps and gowns, hugs and hurrahs, flowers and camera flashes filled the plaza outside The Prudential Center in downtown Newark, N.J., following a recent Rutgers University-Newark commencement ceremony. Many of the Class of 2017 acknowledged the sacrifices made to get them there. Those with student loan debt, however, discussed the sacrifices they have yet to make.
Taj Wright, a public administration major from New York, aspires to be an entrepreneur who builds businesses in urban communities that provide jobs and services to the underprivileged. Before he does that, he’ll need to find a steady job to help repay his loans. He described the cost of his college education as "pretty expensive."
"If kids are graduating and they’re in debt of $100,000, it would be worth it if the salaries were comparable," Wright said. "But the fact is, we’re taking $40,000 jobs - after taxes you’re thinking maybe $30-something - and it doesn’t really equate to the amount of debt that you have. Sometimes it’s like, ’I don’t know if it’s really worth it.’ "
Is it worth it? That’s a question more and more students are asking, as outlined in a recent Prudential Financial report, Student Loan Debt: Implications on Financial and Emotional Wellness. The survey of students and graduates with or without student debt found that only four in 10 surveyed graduates believe borrowing money for college proved to be worthwhile. Only one in four graduates call college debt “good debt.” More than half of graduates still in debt fear they’ll never dig themselves out.
While tuition at Rutgers University-Newark is low compared to other colleges (in-state students pay $10,954 a year, not including housing and other expenses), many students still rely on loans to help pay their way.
Jason Unger, a finance and management graduate from Cedar Grove, N.J., chose Rutgers over other universities because of its comparatively low cost. Even looking forward to a job in financial services, he recognizes it will take years to repay his student loan obligations.
“It’s on my mind,” Unger said. “I’ll need budgeting, holding off on getting a house or a car… it’s a sacrifice you have to make.”
Prudential’s survey found that sacrifices are common among graduates with loans:
- 55 percent say their debt prevents or forces them to delay saving for emergencies.
- 42 percent are delaying buying a home.
- 40 percent say their debt prevents or forces them to delay retirement savings.
- 25 percent are delaying or have delayed having children.
- 20 percent delayed or are delaying getting married.
Not all graduates are letting their debt get them down. "When you come to college you’re kind of scared of different things, how you’re going to pay for things," said Ngima Wambugu, a public and nonprofit administration graduate. Born in Kenya and now living in Woodbridge, N.J., she hopes to work for the United Nations to help people of different cultures come together to solve their societal problems. "I got some scholarships, financial aid, and I don’t feel too scared about paying off my student loans. Right now, we’re going to go for dinner and then turn up and celebrate with my friends."
Elaine Reinoso, an art major from Miami who hopes to become a full-time artist, isn’t concerned about repaying her loans, despite her chosen occupation. "I know I can do it if I’ve gotten this far," she said.
For some students, such confidence may be naïve—Prudential’s survey found that 53 percent of current borrowers don’t know how much their monthly payments will be. A whopping 74 percent don’t even know how long their repayment period will last. Twenty-five percent of graduates still paying off loans say they would have chosen a higher-income career if they had a chance to do it all over.
What do today’s debt-laden grads think about recent criticism that millennials are wasting their money on luxuries like $19 avocado toast?
"Oh yeah, I wish!" Wright says. "We can’t afford avocado toast, unfortunately."
Read Student Loan Debt: Implications on Financial and Emotional Wellness or learn more about the research from our recent press release.
Prudential Financial Inc. Newark, N.J.