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”).
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