This year’s graduates who borrowed money for college will leave with an average of $37,137 in student loans. That’s the highest amount ever – beating last year’s record by six percent.
So how do new grads plan on tackling this debt? We surveyed members of the Class of 2016 about when they plan to start making student loan payments, what they used their loans to pay for, and whether they think it was all worth it.
Class of 2016 + student loan debt
After you graduate, how soon do you plan to start making payments on your student loans?
- Right away: 38.24%
- In 6 months, when my grace period ends: 46.15%
- More than 6 months after graduation: 15.61%
Fortunately, most respondents said they plan to either start paying off their student loans right away or as soon as their grace periods are up. However, borrowers who plan to wait until the end of their grace period may still accrue hundreds of dollars of interest or more on unsubsidized loans. Additionally, more than 15 percent of new graduates expect to delay making payments beyond the six-month grace period.
Not surprisingly, those who expect to earn a higher salary are more likely to start making payments immediately following graduation, while respondents who don’t expect to have a job are more likely to delay payments.
Did you use student loans to pay for things other than educational expenses, such as vacations, dining at restaurants, or entertainment?
- No: 79.80%
- Yes: 20.20%
The overwhelming majority of Class of 2016 graduates used their student loans responsibly and only for educational expenses. But one in five respondents did admit to using their student loan funds on non-educational expenses such as entertainment, meals out, and vacations.
It’s a stat that’s concerning, considering what a burden student debt has become for so many people. Many of these grads will undoubtedly regret that decision when it comes time to pay those loans back (more on that next).
Do you think your college experience was worth the cost?
- Yes: 47.11%
- No: 14.24%
- I’m not sure yet: 38.65%
While almost half of respondents were confident that the cost of college was worth it, about 14 percent said the price wasn’t worth it. About one in three grads indicated they weren’t sure if the cost was worth it, which seems concerning given the high costs to earn a degree.
Job outlook for new graduates
Some of the biggest challenges new graduates face when it’s time to start making those student loan payments are related to finding a job. Often, students are convinced that jobs will be readily available for new grads or that they’re guaranteed to earn a certain salary that can support payments. Unfortunately, that’s not always the case (just ask our CEO).
In addition to student loans, we also polled this year’s grads about their thoughts on job opportunities. Results were fairly mixed, but overall, it seems as though the Class of 2016 is cautiously optimistic.
How confident are you that you’ll get a job within 3 months of graduation?
- I definitely think that I’ll have a job: 51.34%
- I think my chances are around 50/50: 33.03%
- I don’t think that I’ll have a job by then: 15.62%
With the majority of respondents predicting they’ll have a job within three months of graduation, the Class of 2016 may have some reason to be optimistic. According to the Economic Policy Institute, unemployment among recent grads sits at 5.6 percent, which is the lowest it’s been since 2007.
Still, one third of grads thought their chances were a toss up, while just 15 percent believed they wouldn’t find a job within three months.
How does your expected salary now compare when you first chose your major?
- I expect to earn a higher salary: 40.34%
- I expect to earn about the same salary: 42.43%
- I expect to earn a lower salary: 17.23%
Over 80 percent of new grads think they’ll earn a salary equal to or higher than they expected to when they first chose their majors. But nearly one in five graduates believe they’ll earn a lower salary than they originally expected.
Those who expect to earn a lower salary are about three times as likely to wish they had chosen a different major (see more below).
Based on the cost of your education, what would you do differently regarding schooling?
- I wouldn’t do anything differently: 35.76%
- Take fewer semesters to graduate: 26.20%
- Attend a less expensive school: 17.63%
- Choose a different major: 12.75%
- Attend a better school (even at higher cost): 7.67%
Despite record student loan debt and high unemployment rates among young adults, more than a third graduates would not change anything about their decisions regarding their college choices or cost.
However, of those who would do something differently, about one in four stated they would have taken fewer semesters to graduate. Nearly one in five would have chosen a less expensive school.
Ultimately, how the Class of 2016 will fare in their careers is still largely to be determined. While there’s little college grads can do to control the job market, they must take action to pay down their record student loan debt. We’ll soon find out if that’s what they choose to do.
Survey was conducted via Google Consumer Surveys on behalf of Student Loan Hero from May 6 – May 8, 2016, with a nationally representative sample of 1,012 graduating students living in the United States. “Will you graduate with a degree from a college or university in 2016 and have student loan debt?” was used as a screening question (with a target answer of “yes”).
Interested in refinancing student loans?Here are the top 6 lenders of 2019!
|Lender||Variable APR||Eligible Degrees|
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1 Important Disclosures for SoFi.
2 Important Disclosures for Earnest.
To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Earnest fixed rate loan rates range from 3.89% APR (with Auto Pay) to 7.89% APR (with Auto Pay). Variable rate loan rates range from 2.50% APR (with Auto Pay) to 7.27% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of April 17, 2019, and are subject to change based on market conditions and borrower eligibility.
Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.
The information provided on this page is updated as of 04/17/2019. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, email us at email@example.com, or call 888-601-2801 for more information on our student loan refinance product.
© 2018 Earnest LLC. All rights reserved. Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by or agencies of the United States of America.
3 Important Disclosures for Laurel Road.
Laurel Road Disclosures
However, if the borrower chooses to make monthly payments automatically by electronic funds transfer (EFT) from a bank account, the fixed rate will decrease by 0.25%, and will increase back up to the regular fixed interest rate described in the preceding paragraph if the borrower stops making (or we stop accepting) monthly payments automatically by EFT from the designated borrower’s bank account.
However, if the borrower chooses to make monthly payments automatically by electronic funds transfer (EFT) from a bank account, the variable rate will decrease by 0.25%, and will increase back up to the regular variable interest rate described in the preceding paragraph if the borrower stops making (or we stop accepting) monthly payments automatically by EFT from the designated borrower’s bank account.
All credit products are subject to credit approval.
Laurel Road began originating student loans in 2013 and has since helped thousands of professionals with undergraduate and postgraduate degrees consolidate and refinance more than $4 billion in federal and private school loans. Laurel Road also offers a suite of online graduate school loan products and personal loans that help simplify lending through customized technology and personalized service. In April 2019, Laurel Road was acquired by KeyBank, one of the nation’s largest bank-based financial services companies. Laurel Road is a brand of KeyBank National Association offering online lending products in all 50 U.S. states, Washington, D.C., and Puerto Rico. All loans are provided by KeyBank National Association, a nationally chartered bank. Member FDIC. For more information, visit www.laurelroad.com.
4 Important Disclosures for LendKey.
Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
5 Important Disclosures for CommonBond.
Offered terms are subject to change. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900). If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown.
All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate. All variable rates are based on a 1-month LIBOR assumption of 2.49% effective March 10, 2019.
6 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|2.50% – 7.27%1||Undergrad & Graduate|
|2.50% – 7.12%3||Undergrad & Graduate|
|2.81% – 8.79%4||Undergrad & Graduate|
|2.50% – 6.65%2||Undergrad & Graduate|
|2.55% – 7.12%5||Undergrad & Graduate|
|3.00% – 9.74%6||Undergrad & Graduate|