NEW YORK (MainStreet) — Four years after graduating from Syracuse University, Dan Kaplan’s first priority each month is to pay his student loans, hindering his plan to save for an emergency fund or to buy a car.
After borrowing $25,000 for his bachelor’s degree, the marketing and communications employee for a New York government organization shifted his spending and saving habits. Kaplan has maintained a “fairly strict, $300-per-month approach to my payments” and has allocated nearly all of his end-of-year bonuses from previous jobs and holiday gift money from family members toward the loan balance.
While this dedicated approach has helped him whittle down the amount of his debts so that they will be paid off by early 2016, Kaplan has also felt the strain of not having a personal rainy day fund for unexpected expenses or other goals such as buying a vehicle or “an eventual home of my own, which has really started to hit home as friends and family members around my age have begun buying these things.”
Kaplan’s struggle is becoming more commonplace as tuition costs have risen steadily and more students are borrowing money to fund their degrees, forcing many Millennials to postpone purchases of a car or home or other milestones. A July survey conducted by Bankrate, the North Palm Beach, Fla.-based financial content company, found that 56% of Gen Y-ers with student loan debt delayed major life events because of their debt compared with 43% of older adults.
The most common event Millennials were compelled to shelve was purchasing a home, followed closely by saving for retirement and buying an automobile. The survey also revealed that 28% of 18- to 29-year-olds have student loan debt compared with 41% of 30 year olds to 49 year olds.
Student Loans Affects Generation X Too
“Student debt is often portrayed strictly as a Millennial issue, but the truth is that Americans of all ages have put their lives on hold due to student debt,” said Steve Pounds, a Bankrate.com analyst. “Delaying major life milestones such as buying a home or saving for retirement doesn’t only affect the individual and his or her family, it also has effects on the overall economy.”
Over half of the borrowers said they lacked receiving adequate information or advice about the ramifications of accruing the debt with 66% of Millennials who voiced this sentiment.