How student loan debt is affecting Americans’ financial decisions

Yahoo Finance's Aarthi Swaminathan joins the Live show to discuss how student loan debt is affecting Americans’ financial decisions.

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AKIKO FUJITA: Well, student loan debt is forcing roughly 60% of US adults to put off making major financial decisions, that's at least according to a new survey out from Bankrate. Let's bring in Yahoo Finance's Aarthi Swaminathan, who's got a breakdown of that report. Obviously, something that you followed very closely, Aarthi. What kind of decisions are we talking about in terms of people delaying because of the debt crisis?

AARTHI SWAMINATHAN: So some of the decisions include saving for retirement, saving for emergency savings in case of some kind of medical emergency, getting married, having children, buying a house, getting a car lease-- some of these decisions, it's kind of interesting, we've talked about it a lot, but it's resurfacing now because when this economy, with housing prices this high, you're not buying a house. You don't even have a car.

What happens when the economy gets worse? You know, you need all these investments. So it is a very interesting thing to think about, because when it comes to Gen Zers, this number goes even higher. 74% of Gen Zers have delayed financial big financial decisions, 68% of millennials. So the younger they are, the more they kind of regret taking on the student loan debt, so to speak. It's worth considering that some of the very young high school graduates that I'm talking to have actually even thought about skipping college completely because they actually don't want to take on this debt in the first place.

AKIKO FUJITA: I mean, that begs the question-- what do you get in return for a college degree? And, Aarthi, the thinking for a while has been that you take on this debt because by going and investing in a college degree, you get a job that pays much more. What does the study say?

AARTHI SWAMINATHAN: So this study didn't address it-- by Bankrate-- didn't address it. But researchers basically showed that the earnings that you get post your bachelor's degree, post your master's degree is going to be much higher. But again, like, does the debt really make sense, right?

So the New York Fed calculated the opportunity cost of not going to college for one year and found that you're actually missing out on thousands of dollars of increased earnings potential. In this survey, 6 out of 10 said that higher education-- basically, the degree-- helped them make more money. That's only 6 out of 10. 17% said it didn't have that much of an effect, 19% said that it had no effect. So that's really questioning the return on investment on a college degree.

AKIKO FUJITA: Well, and on that front, Aarthi, you said, you know, there's a lot more people who are rethinking whether to go to college-- whether the payoff is there. And we've seen a number of online platforms like a Coursera offer these certificates that allow you to apply for engineering jobs at a place like Google. I mean, if that's where the demand is, are we likely to see more and more potential students say, maybe I don't need to go to college. Maybe I can go for these specialized degrees?

AARTHI SWAMINATHAN: Yeah. So there has already been some reporting on a lot more, like, students deciding that, OK, I'm going to take a online program or a coding bootcamp. And then I'm going to launch into an amazing career in software engineering. I spoke to one student that-- we're going to put our story out soon-- but he basically said, I'm actually on my second job as a software engineer because I completed a coding bootcamp and I have zero debt while my classmates are still in college. Why did I have to go to college for this?

But at the same time, you know, many blue collar workers-- and this was a story in the "Wall Street Journal"-- many blue collar workers are being trained by companies-- trained up to fill several positions for business development associate positions and IT roles. So companies are really in a big race to hire. And we're seeing more and more Amazons, and Microsofts, and all these companies invest very heavily in their workers to upskill them.

So it's really, again, in this situation where the labor market is so tight, this question of, why do I have to go to college? Keeps coming up. But again, that's because of this unique situation we're in right now. What happens when we go into the big scary word, recessionary environment? We don't know. But for now, very, very interesting to watch as, you know, does this drive colleges to you charge less? We don't know yet. So a lot of things to keep watch.

AKIKO FUJITA: And we've seen employers kind of tapping into that as well-- those like Amazon saying, well, we will help pay for your college degree. Interesting story, as always, to watch. Aarthi, thanks so much for that.