Student Loan Debts Disrupt Confidence in the Future

There are hardly people in America who haven’t gone through a single debt in their lives and do not know what it feels like. In most cases, indebtedness is a source of great stress, which can be distressing and, in some cases, life-crippling.

Student loan debt is a good example of how many young people get trapped in the cycle and when they finally break it, they think twice before going for another undertaking, which might entail a debt. In the USA, the total student loan debt stats call an amount dancing in the trillions. Not infrequently, paying off turns out to be more challenging than it seems at first. Once a person, who has broken free, has to face the prospect of another debt, most likely, he or she will choose not to go through it another time.

There are statistics that eloquently testify to the severity of the problem, which is increasingly tough. Ironically, this often predetermines such milestone events as getting married. With the average wedding budget approaching $35,000, getting married for a young man, who has just gotten the load off his or her back, opens up another murky prospect. Many young people have spent years hammering away at their balances and now simply refuse to arrange weddings. They choose to direct money into retirement and emergency savings instead of investing in a lavish single-day event.

Many Americans choose not to get married at all, because they just do not want to take on someone else’s loans. The growing indebtedness has resulted in a significant decrease in the number of marriages over the past three decades. In the 1980s, about 50% of young men would get married at a certain age. By the late 1990s the rate was below 40%. By 2015, the percentage was about 25%.  About 20% of millenials mentioned indebtedness as the biggest discourager in the context of marriage. This is just part of the general economic trend, which is observed these days and embraces increasing poverty, unstable earnings and growing housing bills.

Home ownership in question

Debts discourage people from other important decisions as well. There are examples of graduates and post-graduates, who have just broken free from student loans, refusing to buy homes. The prospect of getting into a mortgage deal with an even deeper debt looming makes them want put it off or reject completely. Over the past two decades, home ownership among young people between 25 and 35 years old has dropped from 45% to 37%. Largely this happens due to the increasing student loan debt statistics. Surveys say that millenials are finding it harder to keep to age standards of home ownership than their parents. They express a desire to achieve a financial status that would enable them to buy a property without falling into a disastrous debt. All these factors have contributed in a significant increase in the first-time homebuyer age over the past decade. It is no longer whether or not young men and women are going to buy a home at all that counts, but when they are going to do it.

Good and bad debts

It is not that debt is the ultimate evil. With a decent leverage, debt can be instrumental in building a wealthy and independent life. In this context, debt is inalienable part of financial planning and activity. There are a few ways to ensure that you go for a healthy debt:

This conclusion categorizes student loans as ‘good debt’, because it creates a basis for building appreciating assets and, consequently, quick payoffs evolving into income. However, borrowing must be regarded with great care and responsibility: before you go for a loan, please, make sure you have resources to handle it!

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