College grads earn more, but is the cost of student loan debt worth it?

College graduates will leave school this month with a diploma – and in many cases, tens of thousands of dollars of debt. Even though studies show they will earn around $22,000 more than their peers with only a high school degree, is the expense worth it?

Intelligent, an online magazine that focuses on educational issues, recently interviewed 800 people who graduated during the past 10 years. Among the findings:

Half of this group said they have less than $5,000 in their savings account, leaving little room for any emergency expenses they may encounter. In addition to lacking a robust savings or emergency account, 43 percent of respondents reported that they either often or always live paycheck to paycheck.

When facing frequent financial uncertainty as many in this survey group appear to be, putting money toward retirement likely is low on the list of priorities. In fact, when asked how much money they have contributed to their 401(k) or other retirement plans, 15 percent of respondents said they don’t even have one set up. An additional 13 percent report that they have under $1,000 in their retirement savings.

Some recent college graduates also are contending with high levels of credit card debt. When asked for an approximate amount owed on credit cards, one in five respondents reported having $20,000 or more in credit card debt, while 10 percent said they owe upwards of $40,000. Similarly, and likely related to, their credit card debt, about 21 percent of recent college grads incurred upwards of $20,000 in medical debt during the pandemic, while 13 percent said they have more than $40,000 in medical debt from the pandemic.

Three-quarters of survey respondents still owe on their student loans, with more than one-third owing upwards of $20,000. Of this group, 56 percent said it will be somewhat or very difficult for them to start paying their federal student loans again, and only 14 percent said they still have made payments during the loan pause of the past two years.

“Although a college degree undoubtedly opens up job opportunities with higher earning potential, this doesn’t mean that graduates are guaranteed a stable financial future,” the report concluded. “In fact, many of our survey respondents reported an alarming lack of savings and high credit card debt, and it would appear that the impending restart of federal loan payments, if and when it does happen, will only put more strain on this group of recent college grads.”