One in Four College Students Expects to Have Loans Forgiven
Nov 12th, 2014 @ 9:50 PM by Amber Nelson
Nearly a quarter (24 percent) of all U.S. college students believe their student loan debt will eventually be forgiven, according to a new survey from Junior Achievement and PwC US.
The “Millennials & College Planning” findings did not reveal why student expect to have loans forgiven, but with the aid of government programs, it may be possible for one in four graduates to have some portion of their loans repaid for them.
The Consumer Financial Protection Bureau says that a quarter of the U.S. workforce is eligible for the federal student loan forgiveness program. That includes those who work in the public service sector and some non-profit professions.
Of course, not all of the student loan will be erased. The federal programs require 120 monthly payments – or 10 years’ worth of repayment – before the loan forgiveness kicks in. As the average student debt balance for graduates of the class of 2012 was $26,885, there may not be much to forgive after 10 years.
Still, that promise of debt release after a decade may be enough to sway some students toward public service careers. Costs are definitely a major concern for college enrollees these days. “College tuition and loans top the list of money matters that are worrying Millennials ages 18-29, with one in five (21 percent) claiming it as their family’s main financial problem,” said the report. “A recent survey released by Mintel of more than 2,000 Americans over the age of 18 revealed that only one in five think student loans are a good investment, compared to more than half believing so in 2012.”
The survey found that student loan debt is taking a significant chunk out of graduate pockets. A third of those with student loans pay more than $300 a month and there is even a small segment (5 percent) that pay more than $1,000 a month in college debt.
The Junior Achievement report was conducted among 1,000 students in the 13-30 age range.
Amber Nelson is a seasoned mortgage industry writer and a regular contributor to Loan.com and Mortgage101.com.