Americans are staying silent on student loan debt — and it's not helping

Student loans are one the most uncomfortable things for Americans to talk about. Here's why it's time to open up.
Image: college graduation
Americans have amassed $1.5 trillion in student loan debt, with one in four Americans carrying a balance. Shutterstock
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By Megan Leonhardt, CNBC

When it comes to uncomfortable conversations, Americans would rather talk about pretty much anything else — politics, health issues, religion — than discuss their finances.

Yet the money topic Americans voted as most thorny is one that’s constantly in the news: student loans. Over a third of Americans say they see student loan debt as the biggest financial taboo, according to a Harris Poll of over 1,000 U.S. adults commissioned by TD Ameritrade.

A similar survey conducted by the MIT AgeLab and sponsored by TIAA found that 40 percent of respondents reported they never talk to their family about their student loans. In fact, over half said their families know “nothing” or “very little” about their debt.

Yet you’re far from unique if you’re swimming in student loan debt. Americans have amassed $1.5 trillion in student loan debt, with one in four Americans carrying a balance. And both the prevalence and the effect of student loans is widely studied: the Fed found that 20 percent of the homeownership decline among millennials (ages 24 to 32) can be attributed to this debt. Other surveys have found that student loan debt is forcing millennials to put off other major life milestones, such as getting married and starting families.

Democratic 2020 presidential candidates are even making student loan debt solutions a core component of their campaigns — promising everything from better refinancing options to introducing more debt forgiveness programs to wiping it out completely.

So why aren’t people talking about their student loans around the dinner table or with friends over drinks? It’s personal, experts say. “Student loan debt may be pervasive and a constant topic in the media and in the political arena, but it’s still debt,” Erin Lowry, author of Broke Millennial Takes On Investing, tells CNBC Make It. “People are fundamentally uncomfortable talking about debt because it’s easy to assume another person is going to pass judgment on your choices.”

And boy do they.

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Those types of comments are on loans that are generally considered “good debt.” While a lot of people will cop to having student loans, it’s less common for people to comfortably disclose actual numbers, Lowry says.

Living with student loans long after class lets out

Playing his cards close to his chest is familiar territory for a 40-year-old lawyer living in South Carolina. Jay, who asked to be identified by a pseudonym to protect his privacy, says that while his loans are an open book with with his wife, he only talks in generalities with other family and friends. “Outside of how much we paid for our home, I don’t generally tell people about my finances,” he tells CNBC Make It.

People are fundamentally uncomfortable talking about debt because it’s easy to assume another person is going to pass judgment on your choices.

Erin Lowry

Despite graduating from law school eight years ago, Jay says he owes nearly $250,000 in student loans. So far, he’s paid over $80,000 on the loans, yet he owes more now than when he started. “It is frustrating,” he says.

But it’s not a complaint he shares widely because he doesn’t want to deal with the judgment around his balance and his decisions. “I went to law school a little later in life. I was married with two kids so I had to borrow a little more than I wanted to,” Jay says.

Adele Nathan, a 33-year-old physical therapist in Chicago, is also reluctant to share to discuss the details of her student loan debt with people. “I don’t have any shame associated with it,” she says. “That being said, unless it’s a close friend or family member, I don’t really ever share the amount I had to take out.”

Nathan is paying down about $260,000 in student loans she took out for her physical therapy degree. “Most people in my profession had to take out loans for grad school, so it’s common parlance in the workplace,” she says. But while she rates herself as pretty open about money and financial topics, when she’s out with friends who work in different industries, student loans are “just not what we talk about, ” she says. “They just don’t get it,” she adds.

Her debt isn’t going anywhere fast, even though she’s paying about $300 a month toward her loans. At that rate, she’s putting about 15 percent of her monthly take home pay toward her loans, but that doesn’t even cover the interest.

“At my salary, there’s absolutely no way for me to pay this off in less than five years while living in a major U.S. city,” Nathan says. To cope, she says she “compartmentalizes” her student loan debt, ignoring it whenever she can. “I allow it to resurface every year when I have to reapply, but then I shove it right back down.”

Nathan calls her loans a “baseline stressor, ” but she says it could be much worse. Her coping mechanism has allowed her to, as she puts it, “say yes” to many life experiences, including getting married, starting a family and taking new jobs. Although that may change as Nathan and her husband gear up to buy a home. “I’m waiting for the other shoe to drop — I’m wondering how much [the student loans] will impact our decision to buy and what we’re offered as a mortgage,” Nathan says.

It’s time to open up about loan experiences

Yet despite the reluctance to share the details on their student loans, overall, half of Americans in the Harris Poll say it would be healthier if people felt they could discuss money topics more freely.

It would help if people talked more openly about student loans and the effect of having them, Jay says. “All the conversations are in the wrong direction in actually helping people,” he says, referring to media coverage of the Democratic presidential candidates plans to manage the country’s student loan crisis. “I don’t want someone to pay off my loans,” he says.

Instead, he’d like more information and education for borrowers, specifically around repayment. “I want people to understand the trap students get stuck in when they can’t afford full payments coming out of school. They get stuck with high interest loans that they can’t refinance for a better loan,” he says.

“It would have been helpful if someone was able to spell out for me what it meant to take on this amount of debt,” Nathan says. “I like my job a lot, but I didn’t realize that by signing up for this career, I was firmly shutting the door on everything else until I could pay it back.”

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