First Republic Survey: Student Loan Debt Causing Stress And Delaying Major Financial Decisions

First Republic Bank, January 30, 2019

Close to 75 percent of Americans with student loan debt feel depressed by the financial burden, while 73 percent feel it should be easier to refinance and fully 65 percent feel a sense of urgency to refinance with interest rates rising, according to a new survey commissioned by First Republic Bank  (NYSE:FRC).

The burden of student loans is also postponing major life and financial goals, including owning a home. That finding is consistent with a new Federal Reserve analysis, which concluded that student loan debt is a major factor in declining home ownership among younger people. Nationally, the median amount borrowed for a bachelor’s degree is $26,500.

“The new data highlight the depth of the student loan problem and the real emotional toll it’s taking on the 44 million Americans with student loan debt,” said Senior Vice President James Herbert, who leads First Republic’s student loan refinancing group. “Student loan debt has become a much bigger burden as the cost of education has risen rapidly and is diminishing borrowers’ standard of living.”

The national survey, which was fielded by First Republic in early January with over 2,000 respondents with student loan debt, found:

  • 74% of Americans with student loans are depressed by the financial burden, and 51% say the emotion most strongly associated with making their student loan payment each month is “frustration.”
  • 73% of those surveyed said it should be easier to refinance their student loans, and many don’t know where to start.
  • Paying off student loan debt has prevented borrowers from upgrading their living situation (66%), making the down payment on a new home (44%), getting a new car (43%) or doing something fun, like taking up a hobby (43%).

“While people understood the financial commitment of student debt, many had no idea it would be so emotionally burdensome after they succeeded in graduating from college and getting a job,” Herbert said. “Across the country, borrowers are seeking solutions to reduce their debt. The good news is that relief is possible if people refinance their student loans.”

Herbert said borrowers should first understand the interest rates on their current loans and their cash flow needs to determine the right terms to guide their refinance decision. Securing a low interest rate loan is key to reducing monthly payments. He also suggests consolidating multiple loans into one loan to simplify debt management into a single payment.

“Look for the lowest interest rate possible because it can significantly lower your monthly payment and save a lot of interest over the life of the loan,” Herbert recommends. “First Republic has among the lowest rates in the country, and we often help our clients substantially reduce the interest paid and get them out of debt sooner. Also make sure you find a loan without an origination fee, annual fee or a prepayment penalty. There’s no need to pay additional fees.”

At the end of 2016, First Republic acquired Gradifi, a company that provides innovative solutions for paying down student debt and saving for college through corporate workplace benefit programs. These solutions also include a student loan refinance marketplace, Gradifi Refi, where borrowers can learn more about refinancing options available to them and access some of the lowest rates in the country. Together, First Republic and Gradifi are committed to meaningfully reducing the student debt burden for individuals across the country.

To learn more about First Republic’s student refinancing solutions and the option of working with a personal banker, visit https://www.firstrepublic.com/student-loan-refinancing.

For employers interested in offering a workplace benefit program to help their employees pay down student debt or save for college, visit Gradifi, a First Republic company.

About First Republic Bank
Founded in 1985, First Republic and its subsidiaries offer private banking, private business banking and private wealth management, including investment, trust and brokerage services. First Republic specializes in delivering exceptional, relationship-based service and offers a complete line of products, including residential, commercial and personal loans, deposit services, and wealth management. Services are offered through preferred banking or wealth management offices primarily in San Francisco, Palo Alto, Los Angeles, Santa Barbara, Newport Beach and San Diego, California; Portland, Oregon; Jackson Hole, Wyoming; Palm Beach, Florida; Boston, Massachusetts; Greenwich, Connecticut; and New York, New York. First Republic is a constituent of the S&P 500 Index and KBW Bank Index. For more information, visit firstrepublic.com.

 

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