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Knowledge may be power, but it’s also expensive — so expensive that more than a third of Gen Zers expect to carry $50,000 or more in debt for their bachelor’s degree, according to new data.

A survey of more than 8,000 high school and college-aged students from the scholarship search site Scholarship Owl found that the overwhelming majority expect to carry student loan debt after graduation. However, most underestimate exactly how long it will take them to pay off their education.

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What the data says

  • Gen Z is realistic about the cost of higher education: 90% said they expect to owe money when they graduate, and 36% expect to owe a whopping $50,000 or more for a bachelor's degree.
  • As for the length of time Gen Zers think they’ll be on lenders’ hooks, most think they’ll pay off their loans within 10 years.

Expectation vs. reality

When it comes to the cost of their education, the accuracy of Gen Z's expectations are mixed. While the majority is correct in assuming that they'll owe money after graduating, the actual number of graduates with student debt is much lower than 90%.

According to the think tank Urban Institute, 70% of students who receive a bachelor's degree have education debt when they exit college. It's not likely that will increase to 90% by the time Scholarship Owl respondents graduate.

There are about 44 million people in the U.S. who currently carry student loan debt, and most of them (92%) have federal loans to pay off.

As for the amount they'll owe, some of the 36% of Gen Zers who estimate having to pay off at least $50,000 probably won't have as much debt as they expect. While some undergraduates do borrow that much, it’s far from the norm.

Federal Reserve data — which covers all borrowers, not just recent bachelor’s degree recipients — says only a quarter of Americans with outstanding debt owe more than $50,000. The Association of Public and Land-Grant Universities, a research and policy organization, found that at four-year public colleges (where the majority of bachelor’s degree students attend), 80% of students graduate with less than $30,000 in loans.

Gen Zers are, however, underestimating how long they'll be paying lenders. According to an analysis of government data by financial aid expert Mark Kantrowitz, the average student takes about 16 to 19 years get out from under their debt, not 10.

The takeaway

Gen Zers know they’ll owe money after they graduate, and a significant portion expect they’ll owe quite a bit. But they’re much too optimistic about when they’ll be free from monthly student loan payments, which Scholarship Owls says makes them unprepared for what their financial circumstances will look like in the future.

The consequences of student loan debt can have long-lasting ripple effects on graduates’ life choices, and many of them are forced to delay major milestones as a result. In fact, according to a 2022 national survey, more than 80% of adults with student loan debt report they have put off at least one goal, like buying a home, saving for retirement and even getting married, because of their financial burdens.

“Student debt creates other burdens that also weigh heavily on borrowers, with 62% of respondents indicating adverse impacts on their mental health,” Scholarship Owl says in the report.

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