As the oldest members of Generation Z turn 23 this year, they are now fully into or even past their college years, but the bad news is the student debt crisis is only continuing to worsen.
HousingWire's March issue outlined the long-term consequences [subscription required] of student debt on the housing economy. As it turns out, student debt is taking a much larger toll on the housing economy than previously thought.
But now, as Gen Z steps into the college arena, the crisis is set to deepen. In a study which surveyed 850 current students of a four-year college or university that have student loan debt and are between the ages of 18 and 23, LendEDU, an online marketplace for student loan refinancing, found Gen Z may be less than prepared to deal with their debt after graduation.
The study found a full 39.18% of Gen Z borrowers answered either no or unsure when asked if they would be able to fully repay their student debt. Another 52.94% said they believed they will be helped by federal student loan forgiveness programs, when in reality, less than 10% of borrowers will be aided by forgiveness.
The study also showed Gen Z is lacking in even just a general knowledge of how their student loans function. For example, 60.12% of borrowers thought it was possible to refinance their student loan debt with the federal government, but this program doesn’t exist.
Also, 63.77% of borrowers answered either no or unsure when asked if unsubsidized student loans accrue interest during deferment, 32.24% of borrowers have never looked at their student loan account and 19.76% were not sure if they have private student loans.
The study shows Gen Z borrowers are lacking knowledge when it comes to their student loans, from their interest rate to how long they have to repay it. To see other answers from Gen Z borrowers, click here.
HousingWire magazine subscribers already saw that in March’s magazine story, it shows, in depth, the devastating effects this could have on the housing market, not the least of which involves potential homebuyers postponing buying a home.