Nearly everyone has made a choice that seemed right in the moment but soon became a decision to regret after the fact. Some mistakes are minor -- a drink too many that leads to a rough morning or a second slice of cheesecake that makes it tough to button your pants.
Some choices, though, have longer-ranging consequences that we grow to regret in hindsight. That's certainly the case with student loan debt, as 77% of millennials who borrowed money to pay for college wish they had approached this decision differently, according to a Bankrate survey. This sobering number should lead anyone considering taking out loans to pay for college to stop and consider alternatives.
What problems do student loan debt cause?
Borrowing money to pay for higher education can impact the rest of your life.
Nearly three-quarters of millennials with student loan debt (73%) said they delayed a major life milestone because of their student loan debt. About a third have put off buying a home, 25% delayed saving for retirement, and 19% pushed back having children because of their student debt burden.
In theory, student loans allow people to pay for college and they are able to pay them back after graduating with a degree that increases their earning power. In many cases, however, that debt leads to a degree only marginally more valuable than one earned at a cheaper school or in a more lucrative major at the same school.
While it's tempting to borrow money to attend the best possible college, doing so is not a fiscally prudent choice for many. Sure, a lawyer, doctor, or engineer might snag a higher-paying first job by attending a top-tier university but, in many cases, the investment does not pay off quite so directly.
"For prospective students and their families, many of who will help them to pay for their secondary education, we'd urge them to investigate all possible options for financial aid including scholarships to limit their borrowing, " said Bankrate Senior Adviser Mark Hamrick in a press release. "Their options also include attending a lower-cost school such as those in-state as well as more economical trade schools and community colleges."
Don't look back in anger
If you already have student loan debt, there's nothing to do aside from paying it off in a timely fashion. But for those who have yet to take on student loans, and for the parents of prospective college students, considering the overwhelming student loan regrets among millennials can help you plan better and avoid such mistakes.
Of the 77% of millennials surveyed who said they regret their student loans, 34% wish they would have applied for more scholarships. A quarter (25%) would have chosen a cheaper university, 24% would have chosen a community college or trade school, and 23% would have chosen a different major. Almost one in 10 (9%) would have opted not to attend college at all.
Of course, the easiest way to avoid student loan debt is for parents to start saving early for their kids' college tuition and expenses using a 529 savings plan, which allows parents to put aside money that isn't taxed until it's used to pay for higher education. The money is invested and gets taxed when it's earned, but the growth remains tax-free as long as it's reinvested and ultimately used to pay for qualified education expenses.
If you start early enough, even small regular contributions can fund your child's whole education. Of course, if your kid is heading to school next year, it's too late to start saving in a 529 plan, but if you have even a few years, saving this way can offer your child more freedom or even keep them from needing student loans entirely.
Prospective students and their families should take the long view when deciding which college to attend, which major to select and how to pay for the experience. Students usually pick the most renowned school to which they're accepted, but that can be a vanity decision that doesn't pay off in the long run.
When deciding on a college, do your proverbial homework first. Look at the field in which you hope to work and determine whether a pricier degree will actually lead to more earning power or an easier career path. If the answer is no, take the cheaper educational path so you won't have to put off life milestones as you struggle to pay back loans.