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Joey and her husband have just welcomed a niece. The child was born to Joey's sister-in-law, who was 33 years old at the time, and the birth of her niece made the couple realize how much they wished they could have children of their own. They met in college and have been living in eastern Michigan, hoping to have two or three children. "She's so cute!" Joey exaggerated his niece. She was thinking, "Now I really want a baby." "But the main barrier between reality and the ideal family is a $60,000 student loan with a minimum monthly payment of $800. They can't imagine how they can afford to have children, let alone years of childcare. "It's not going to work economically." She said.
Joey, 26, asked to keep only her name due to privacy concerns. To ensure that she could get a job as soon as she graduated from college and didn't have too much debt, she planned her education very carefully. Her parents saved $24,000 for her. She and her father made spreadsheets to plan costs. But "unconsidered hidden fees" and the extra 30 credits required to become a CPA turned her whole plan upside down. They graduated with $74,000 in debt, slightly more than half of which she owed.
After graduation, both she and her husband found stable employment in their respective fields (her husband is a nurse). Their combined annual income exceeds $100,000. In those years, they all received raises, but the extra income was used to pay off $15,000 in debt. They also spend most of their discretionary expenses each month — about $500 after bills and loans — to pay off what they owe.
Under a one-time plan proposed by U.S. President Joe Biden, Joey and her husband are among 43 million borrowers eligible for $10,000 or $20,000 in federal student loan relief. The Biden administration's student loan waiver program cost up to $400 billion. Whether the couple and their peers will receive any relief remains unknown. Six Republican-led states have sought to roll back the Biden administration's plan, claiming it will hurt future tax revenues, and two individual borrowers claiming they were unjustly denied the opportunity to speak out on the plan. The Supreme Court heard oral arguments in both cases on Feb. 28 and is expected to rule by the end of June.
Even if the justices support the plan, the debt burden of many heavily indebted millennials will be reduced by only a fraction. But for others, the relief has a significant impact on whether they can consider starting a family. Regardless, with so many young people forced to choose between finances and family, this dire situation underscores how overwhelming the U.S. student loan burden has become.
Michael Noe, a researcher at Ohio State University who studies the impact of student loans on the population, said this is the first time in history that student debt is so broad and burdensome. "It's almost like a social experiment to see what impact this has on the rest of life?"
The Biden administration's student loan waiver program will "change" Joey and her husband's lives, shrinking their minimum monthly payments from $800 to $250. "If that, we can start saving for starting a family and buying a house." She said. If the Biden administration's student loan waiver program is in vain, their wages simply won't be "enough to raise a child."
About two-thirds of college graduates who were nearly forty at the time had taken out education loans, and the average American millennial was more than $40,000 in debt. Because of the long-standing racial wealth gap, students from African-American and Hispanic families are more likely to rely on loans to attend college. The debt burden erodes borrowers' discretionary spending on items such as meals, travel and consumer goods. Loan repayment obligations also force borrowers to postpone purchases of big-ticket items, such as their first home. But student loans are also changing people's intimate relationships, preventing them from dating, marrying or becoming parents.
The fact that millennials are delaying the time for having children is often considered an active choice. But many young people with huge student loans believe they won't choose a child as long as they're worried about it. They also have to take money out of childcare costs to pay off debt, a situation that makes even those with above-average incomes uneasy and unable to plan for the future. A 2015 study estimated that women with $60,000 of student debt were 42 percent less likely to have children than their debt-free peers after controlling for variables such as education, class background and demographic metrics. According to the American Association of University Women, women are saddled with about two-thirds of their student loan debt.
Borrowers' hesitation to start a family has led to a decline in the U.S. birth rate, which has fallen to its lowest level in half a century. A decline in the birth rate leads to an aging population, a reduced labor and tax base, and the risk of unfunded pension liabilities. In this sense, the student debt burden is not only shattering the dreams of some hopeful parents, but also a macroeconomic shock that could affect generations.
U.S. student loans soared; The birth rate has fallen
Ariel Cooperberg, a 40-year-old sociologist at the time, began studying how student debt affects young people's transition to adulthood after seeing how heavy loan burdens forced her friends to make difficult choices in their personal lives. To save rent and pay off loans, a friend moved to his mother's basement after college, making it difficult for him to date throughout his twenties and thirties. Another friend was saddled with more than $100,000 in student loan debt, and while she wanted a child, she didn't think she could afford it.
By analyzing data on state loans, Cooperberg and his colleague, sociologist Joan Maya Mazzelis, found that these were more than anecdotes. They found that 60 percent of women born in the early '80s with a college degree had children before age 40, compared with 67.5 percent of women who had not applied for a student loan. The 7.5-point gap is "huge" "in terms of fertility," Cooperberg said, equivalent to about 715,000 women at the optimal reproductive age. "What you need to focus on is, does this generation have descendants?" The answer is clearly no. In the United States, the total fertility rate in 2020 reached an average of 1.64 children per woman of childbearing age, the lowest level since the 70s of the 20th century; in the same year, the cumulative student loan debt in the United States reached nearly $1.7 trillion. A survey of nearly 3,000 undergraduates at two mid-sized public universities in the Northeast and Southeast by Cooperberg and Maazelis showed that 47 percent believed they shouldn't have children if they had outstanding loan debt.
American millennials aren't the only group hesitant to have children. About half of the world's population lives in countries where the total fertility rate (the number of children a woman can expect to have in her lifetime) is below 2.1, which is the fertility level that keeps the population stable. But the U.S. is unique in its college graduate debt problem, thanks to decades of cuts in public higher education funding and rising tuition fees that have left American families with five-figure tuition bills each year.
Among rich countries, the United States is also unique in its lack of national paid family leave and the small amount of assistance provided to families at the national level. This leaves individuals who have to scrape together money to take time off after giving birth or start paying for childcare.
Cooperberg and Mazelis considered the situation in terms of trade-offs. "It's increasingly becoming an economic situation where you can have one thing, but you can't have everything," Cooperberg said. Family, financial security, a college degree, or not having much debt — you can only get one or two of them. ”
Elliott Kindler, then 34, is now thinking about financial security. He graduated from Emory University in 2011 with a degree in religious studies and owes $40,000 in student loans. With the economy still recovering from the financial crisis, the best jobs he could find were offered by Bank of America, which bought mortgage lender Countrywide Financial. He lived at home, paid off debts with $37,000 in salary, and handled foreclosures — "those were pretty miserable three years of my life." He recalled. Kindler believes a graduate degree is the only way to "get yourself a job." An MBA degree may saddle him with more debt, but it will make him a better salary in the long run. His bet paid off: An MBA from the University of Pittsburgh left him with another $60,000 in debt, but it also landed him a $105,000-a-year job at Deloitte. Later, he worked on the financial side of a cybersecurity company in Northern Virginia that was acquired by Google. Now he's a Google employee, including equity and bonuses, and his annual salary is more than $200,000.
In the process, he met his wife, a public school teacher, who he learned after marriage that she had a loan of about $85,000. Thanks to budget sophistication, their student loans dropped from an initial $185,000 to $78,000. Kindler is proud that his annual salary has risen from $37,000 to more than $200,000 a decade later. "But at the same time, these student loans haven't gone away." He said. Their remaining debt needs to be paid off nearly $2,000 a month, which is more than his estimate of Northern Virginia's $1,600 a month in child care costs.
The couple's income in 2020 and 2021 made them eligible for the Biden administration's student loan relief program, while his wife, a government employee, qualified for a separate loan relief program for public or nonprofit sector workers. Kindler noted that the projects would eventually relieve their roughly $45,000 federal debt, "but it depends on political forces." He estimates they will be able to pay off the remaining loans in three to four years. By then, they will all be 37 or 38 years old and will have to face the question of "to have a child or not to have a child?" ". Hopefully as positive as it sounds, I mentioned the generous maternity benefits that Google offers. Kindler said he was aware of the benefits, but he felt they seemed to encourage people to work more and delay childbearing until they needed medical help. (Similar criticisms have been made by observers and tech workers themselves since big tech companies began offering egg freezing services to employees in the mid-2010s.) "I don't want to say it's a bad thing. I think their approach to providing benefits is good. It's just — you know, there's no such thing as a free lunch. ”
Kindler's younger brother, a doctor, is two years younger and earns as much as he does. But because his younger brother worked for a hospital system that was strictly a nonprofit, he quickly qualified for loan forgiveness. In January, the younger brother announced that his wife was pregnant.
Borrow more money to make more money
Joey was lucky enough to land a good job with just an undergraduate degree. But, like Kindler, many young people are saddled with extra debt to earn higher degrees in order to go further in competitive fields. Danny Navarro realized his only way out was to earn a master's degree in public administration after "changing jobs and losing his job multiple times" in the nonprofit sector. A $70,000 loan is still required to pursue a master's degree at George Mason University, where tuition fees are lower in the Washington area. Navarro, then 34, said: "To get a higher salary, you need to do a master's degree, but it feels like being caught in a fierce competition: to make an extra $20,000 to pay off these loans." "He still works in the nonprofit sector." We now have to spend nearly a quarter of our monthly income on debt servicing. ”
Danny Navarro and Laurie Navarro. COURTESY OF DANNY AND LAURIE NAVARRO
His wife, Laurie Navarro, works in the public affairs department of the U.S. government. Her parents are agricultural workers in rural Washington State, and she is the eldest of five children. She always thought she would have four children. But today, the 37-year-old is no longer sure if the idea is realistic and feasible, and even less so since she was diagnosed with unexplained infertility in 2020. Huge amounts of student debt — her $70,000 and Danny's $25,000 — got in the way.
If there's no debt, "we can spend the money on adoption or IVF." He said.
Natasha Quadlin, an associate professor of sociology at the University of California, Los Angeles, who has studied student loan debt, notes that women with student loans are likely to go to college, while college-educated women tend to have children later. "If college-educated women further delay childbearing because of debt, they may face further fertility challenges and other pregnancy-related complications." In short, debt relief may amount to removing significant barriers to fertility for some women. Quadrin added.
The company offers student loan forgiveness
If student debt causes young people to delay or abandon childbearing, what solutions are there to address their concerns? The Biden administration's student loan waiver program could certainly help a lot of people and make it easier for them to move forward with family planning — about two-thirds of millennials have $20,000 or less in student debt, according to the Federal Reserve Bank of St. Louis.
"Having children in the U.S. is very expensive, and the disposable income saved through debt forgiveness can be reused to invest in the next generation," Quadlin noted. ”
But for borrowers with huge debts, this may be trivial. Susan Kahn, managing director of research and policy at the Roosevelt Institute, a left-leaning think tank, said policies aimed at helping families are fraught with political and legal uncertainty, making it difficult for people to take control of their finances. Student loan relief and expanding the child tax credit are "very welcome and desperately needed" for those trying to start a family, but she added: "What is really needed is the policies in place." It saddens me that a range of policies are often stuck between the Supreme Court and Congress, not in place. ”
Over the past 20 years, each state has enacted family assistance programs. At the federal level, the Child Care for Every Community Act, co-sponsored by Senator Elizabeth Warren of Massachusetts, Rep. Mickey Sherrill of New Jersey, and Rep. Sarah Jacobs, Democrat of California, limits the cost of childcare for high-income families to 7 percent of total income, while half of U.S. households will pay $10 or less a day for childcare.
Businesses are aware of employees' desire to have a family. According to a 2022 survey of employer health plans by management consulting firm Mercer, tech companies began offering egg freezing benefits in 2014, and 54% of large companies now include IVF in their reimbursement. However, it is not common to include the cost of childcare in reimbursement. Babysitting costs $5,436 per year in Mississippi and $24,243 per year in Washington, D.C. A rare exception is outdoor clothing company Patagonia, which has been providing on-site childcare at its headquarters since 1983.
Other companies have started taking student loans for their employees seriously. Google announced a $2,500 annual loan repayment benefit in 2020; PricewaterhouseCoopers (PwC) provides repayment assistance totalling up to $10,000. Such benefits help companies attract talent. A 2022 survey of more than 4,000 employees by Mercer found that the second most popular defined-contribution plan benefit for employees is that employers help employees pay off student loan debt in a percentage that employees want from their companies, second only to employers increasing their contributions to employee pension plans. This is preferred for employees under the age of 45.
"Love what you do" – or reduce loans?
Rachel Blomqvist would love to work for a company that helps employees pay off student loans or provide childcare. "It's going to have a huge impact on where I decide to work." She said. At the age of 34, she worked as a user experience designer at an educational technology company and was saddled with $177,400 in student debt: about $20,000 for an undergraduate degree in anthropology at Creighton University and more than $148,000 for a master's degree in East Asian Studies at Georgetown University, plus about $10,000 in interest.
Rachel Blomqvist. CREDIT: COURTESY OF RACHEL BLOMQUIST
I asked her if she knew the amount of the loan she had applied for to pursue her master's degree. At the time, she hoped to work for a nonprofit in international development and qualify for public service loan forgiveness after 10 years. "I just — I was stunned when I saw the numbers because I still couldn't understand what the numbers meant," she said. She was also used to thinking of these loans in such a way that a percentage of her monthly salary was used to pay off her student loans, rather than thinking about how much the loan would really be. In my opinion, I can say: 'Oh, well, I only need to spend 10% of my income for the next 25 years to pay off my student loans.'" I was able to do that. ’”
It wasn't until she got married in 2020 that her monthly loan payments became untenable. Based on her and her husband's combined income, her monthly minimum payment will soon jump from $300 to $900. She and her husband hoped to have at least one child, maybe two, and now she finally felt mentally prepared. But, she said, "I still feel unprepared financially because of my student loans... My personal financial situation is very precarious, let alone have a child. Of course, I don't think I can afford to have two children. ”
A $20,000 waiver through the Biden administration's plan would reduce her arrears to $150,000 — "a number that looks clean." "She said — she's currently trying to think about this from a more holistic perspective and try to approach it holistically." Actually, I kept thinking, how can I pay off this loan? How can I get out of this debt? She said. But there is currently no way for me to actually pay off the money. If they do have children, she wonders how she will tell the kids about student loans. "I want my kids to grow up like they did when I was a kid – doing what they love," she said. But my student loans told me I couldn't do what I loved. (Fortune Chinese Network)
The article was produced with the support of the Economic Hardship Reporting Project.
Written by Anna Louie Sussman
Translator: Zhong Huiyan - Wang Fang
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