What would students do differently if their loans were forgiven?
Anticipated and Actual Effects of Loans
Three and a half years after graduation, only 13 people in the sub-sample (9%) had paid off their loans completely. Yet in some respects the reality of their lives after graduation was better than they had anticipated back in 2017. While 55% of students with loans originally told us they anticipated living with parents or roommates after graduation or working at jobs they did not like in order to pay off loans, only 41% percent of the graduates with loans had ended up using these strategies during the time between graduation and our 2020 follow-up interviews. And while almost 32% of students had anticipated having to delay children until their loans were paid off, only 20% of the graduates with loans whom we surveyed reported actually doing this, while 18% said they were delaying marriage.
Nevertheless, this is a relatively high proportion of postponed marriages and children, and in other respects, even before the Covid-19 crisis, the reality of post-graduate life was more difficult for these students than they had anticipated back in 2017. While more than half the students we interviewed in 2017 had expected that the loans they took out to get their degree would ensure them a better job, only 21 percent of graduates in our 2020 follow-up reported they had been able to get a better job because of their degree. Nearly one-fifth (18%) of graduates reported they could not buy a house because of their loans, while 22% said they had foregone or delayed graduate school because of their loan debt. Only 12-13% of undergraduates had anticipated either one of these possibilities.
Compounding Disadvantages in the Covid Generation
Not only do many of the young adults in our study have loans holding them back, but the Covid-19 pandemic has compounded the delayed launch into adulthood and family formation for many. In the 2020 study we asked graduates, with and without loans, how the pandemic was affecting their lives. Just over 40% of 2017 graduates reported being fired, furloughed, or having their hours reduced because of the pandemic. To deal with the loss of income, 7% of this group had moved back home with their parents, and another 9% who had been planning to move out of the parental home had changed their minds. Fifteen percent delayed buying a house, 11% said they couldn’t pay rent or other regular bills, and 20% said they had had to get financial help from family.
The pandemic also affected romantic relationships and family formation. Seven of the graduates in our follow-up survey reported putting off a legal marriage and wedding, while another 3 got married legally while putting off a wedding party. Thirteen reported breaking up with a romantic partner because of Covid disagreements, or because the distance and stress got to be too much. On the other hand, some relationships accelerated because of the pandemic: 5 reported getting married sooner than originally planned. Another 6 moved in with a romantic partner sooner than expected, but past research has shown that such behavior actually reduces a couple’s chance of marrying at a later point.
The impact of the pandemic on fertility plans was especially noteworthy. Fifteen of our informants reported putting off having children because of the pandemic, with 3 of them delaying fertility treatments. Another 6 decided to have fewer children, or to not have children at all, because of the pandemic. None had children sooner than expected.
Reports of what students and graduates would do if their loans were forgiven were consistent across the two surveys. Almost three-fourths said they would put the money in savings, and more than half said they would save up to buy a house. Among graduates, two-thirds said they would use that money to pay off other debt, and almost 53% would save for retirement. About 21% said they would get married sooner and 19% said they would have children sooner.