Students Graduate With Over $35,000 in Loan Debt

Graduation cap on money
Those with student loans who graduate this year will have an average of $35,200 in debt.

According to a new study by Fidelity Investments, 70 percent of students who graduate with debt in 2013 will have a large balance made up of federal student loans, private student loans, state loans and credit card debts.

Furthermore, the study found that half of survey recipients are surprised by the amount of debt they have accumulated.

Keith Bernhardt, vice president of college planning at Fidelity Investments, said that college students’ surprise at their debt is a “big concern.” He said it shows a need for more education and understanding about the actual cost of higher education.

The study found that over half, 57 percent, of new graduates report that they could have saved more and reduced their spending habits before graduation. Reducing food and entertainment costs was the highest area of potential savings, 69 percent, followed by retail spending, 64 percent.

Bernhardt said it is necessary to begin financial discussions earlier on in students’ lives in order to discuss which savings plan, such as a funding or educational plan, is the best solution to prevent student loan debt.

Of the survey respondents, 54 percent state that they have a financial plan in motion to repay student loan debts.

Despite the financial surprise that occurs when bills begin to arrive, financial experts still agree that this type of debt is positive and the overall education is worth the cost.

Soren Christensen, CEO and national managing director for Advanced Wealth Advisors, told that although student loan debt is not fun, it can be good debt.

“Living in a world in which pretty much every asset class performed poorly over the last decade or so … colleges should be making the argument that this is the best investment you can make,” Christensen said. “What other investment, or asset class, has the potential to return in one lifetime what a college education can?”

Despite the importance of a degree, researching degree topics and projected employment rates are valuable tools for future college graduates.

“Very few young adults think beyond the next semester and are enjoying the ride,” Christensen said. “It’s important to have discussions early on about what degrees and what fields are in demand — especially if you’re going to take on debt to earn that degree.”