Student loan borrowers spend nearly 20 percent of their monthly income on repaying debts, a new TD Bank’s Student Debt Impact survey has found.
TB Bank surveyed more than 1,000 Americans ages 18 – 39 in June, who owed or are currently paying off their student loan debts. Students reported spending one in every five dollars earned on repaying student loan debts, which is $579 a month for on average student debt of $26,495.
Loan repayments are eating up savings of many borrowers with few not even able to save a single dollar. Over 60 percent of the respondents reported saving 10 percent or less of their income per month, while 20 percent are not able to save anything at all.
“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.”
For more than half of the borrowers, it could take four or more years after graduation to repay their student loan debt, while 24 percent anticipate repaying their loans within 10 years or more.
Loans are also affecting many decisions related to daily expenses like taking a vacation, going out for dinner or putting on some muscles in the gym. Some 60 percent of respondents said they don’t take vacations due to the financial stress of repaying debt, while 35 percent dine out less and 20 percent haven’t joined the gym.
“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 added.
In recent months, several lawmakers have been pushing for partial or full forgiveness of student loans held by nearly 45 million Americans. Last month, Senator Elizabeth Warren introduced bicameral Student Loan Debt Relief Act to forgive loans of up to $50,000 for those whose household gross income is less than $100,000 by using already available data on household gross income and pending student loan debt.