1 in 10 Gen Z Student Loan Borrowers Now Has More Than $100K in Debt, Survey Finds
Written by
Gabrielle Olya
Edited by
Amber Barkley
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Having student loan debt has become the norm for the latest generations of college-goers — a recent GOBankingRates survey found that 61% of Americans ages 18 to 24 have some amount of student loan debt. Among those with student loan debt, the majority owe less than $30,000, with 36% of borrowers in this age range owing less than $10,000, 10% owing between $10,000 and $20,000, and 10% owing between $20,000 and $30,000.
But — alarmingly — Gen Z student loan borrowers are more likely than any other generation to have six figures worth of student loan debt, with 10% stating that they owe more than $100,000.
Here’s a look at why members of this generation have such high levels of debt and what they can do about it.
Feeling the Crunch of Inflated College Costs
One reason that Gen Z has higher levels of debt than other generations is that college costs continue to go up. They’ve increased a significant amount in just the past decade — between 2009-2010 and 2019-2020, the total cost of attendance increased by 39.9% at public four-year schools and by 44.2% at private four-year schools, according to the Education Data Initiative.
The average cost of college in the U.S. is now $36,436 per student per year. If you borrow that amount for four years, you’re looking at $145,744 worth of loans, so it’s not too surprising that 10% of Gen Z owes over $100,000.
Housing Is More Expensive Than Ever
Another factor making it hard for Gen Z to pay down their existing student loans is that they are facing high housing costs upon graduation.
“Rent costs are up 28.8% from 10 years ago,” said Scott Lieberman, founder of TouchdownMoney.com. “How can you afford to pay down student loans when your housing costs are such a big chunk of your income? Plus, as we all know, just about everything is more expensive due to inflation.”
How To Tackle Six Figures Worth of Student Loan Debt
Unfortunately, there’s no magic wand that can make Gen Z’s huge student loan burden disappear, especially with student loan forgiveness off the table — at least for now.
“While the Biden administration is working on a new path, it is unclear how long it will take and if it will actually occur,” said Jay Zigmont, Ph.D., CFP, founder of Childfree Wealth. “The next presidential election is likely to have a strong impact on when, or if, any student loan forgiveness might move forward.”
In the meantime, it’s important for Gen Z to take a methodical approach to paying down their debt. Tom Holtam, vice president at UMB Bank, recommends taking the following steps.
Establish a Budget
Making your monthly student loan payments is something you need to account for in your budget, which may mean making some sacrifices.
“Several little changes in your daily spending, like making coffee or lunch at home or getting rid of a streaming service you aren’t using, can help you find a few more dollars that can go towards your student loan,” Holtam said.
Consolidate Debt Where You Can
“With your student loan payments or any other debts that you have, it is worthwhile to ask if you can consolidate the debt into one loan,” Holtam said. “This will usually create one lower monthly payment and interest rate for you to manage.”
Stretch Your Paycheck
Look for opportunities to save on your everyday expenses.
“With payments coming back and inflation at record highs, many people are feeling the pinch on their paychecks,” Holtam said. “Getting creative when you go to the grocery store can help you save a few dollars, and signing up for gas station loyalty programs — if they exist in your area — is also a small step you can take to try and stretch your paycheck.”
More From GOBankingRates
Methodology: GOBankingRates surveyed 1,028 Americans ages 18 and older from across the country between June 27 and June 29, 2023, asking nine different questions: (1) Have you used Artificial Intelligence (AI) for any of the following? (Select all that apply); (2) In retirement, how much do you think you’ll need in Social Security monthly, in order to retire comfortably?; (3) How much do you spend on your average Costco trip?; (4) How often do you go to Costco?; (5) What items do you purchase most frequently at Costco?; (6) How do you think the restart of student loan payments will affect the economy in 2023 and beyond?; (7) How much student loan debt do you currently have?; (8) How will the restart of student loan payments affect your financial situation? (Select all that apply); and (9) How much did you (or do you expect to) inherit from your parents/relatives? GOBankingRates used PureSpectrum’s survey platform to conduct the poll.
