The Trickle Down impact of student loan debt – The Oxford Eagle

Today Americans hold more than $ 1.7 trillion in student loan debt, and it is having a huge impact on the way we live, work, and shape our future. Here in Mississippi, students tend to graduate with about $ 30,000 worth of debt. In a state where the median individual income is only $ 24,500, that’s an overwhelming financial burden.

However, the consequences of this student loan debt go well beyond simple dollars and cents and often affect employee salaries, future savings and retirement, and lifestyle.

According to a recent survey by TD Bank, one-fifth of take-home salaries are used to pay back student loans, often exceeding car payments and even rent. This is where the trickle-down effects start.

With such a significant portion of the paycheck being used to pay off student debt, many borrowers will have to spend less and, more importantly, save. In fact, the vast majority of borrowers (61 percent) set aside less than a tenth of their income each month; many save nothing.

This lack of savings manifests itself in a number of ways. Nearly half (41 percent) of TD Bank respondents said they were delaying 401 (k) posts, and roughly the same proportion said they lack a rainy day fund, leaving many credit cards to bail out for emergency expenses.

How this translates from finance to lifestyle is easy to see. The TD Bank survey found that 60 percent of student loan borrowers do not take vacation. 36 percent were reluctant to become a homeowner. 35 percent rarely eat out. 26 percent delayed the birth of children. 21 percent postpone their wedding. The list goes on, but I think the bottom line is already obvious: major life milestones are postponed – or skipped entirely – due to student loan debt.

So what do we do about it? Finance gurus advise borrowers to make the minimum monthly payment each month and consider refinancing their loans if necessary.

Of course, for future graduates (and their families), it is best to prepare. College Savings Mississippi, a division of your State Department of the Treasury, offers two Mississippi 529 plans that can help reduce or eliminate the need for student loans. Many families choose to stick with today’s tuition fees and upfront college altogether with MPACT, while others choose to deposit into a tax-privileged savings account with MACS. Both offer enormous advantages. So, if you are a parent or grandparent, our website is well worth a look to find out more.

Starting July 15, most Mississippi parents will receive a monthly child tax credit from the federal government. Consider investing these funds in your child’s education. To learn more, visit Treasury.MS.gov/CollegeSavings or call my office at (601) 359-3600.

Mississippi Treasurer David McRae is the 55th Treasurer of the State of Mississippi. In that role, he helps manage the state’s cash flow, oversees Mississippi College Savings, and has returned more than $ 27 million in unclaimed funds to the Mississippi. For more information, see Treasury.MS.gov.

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