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McRae: The Trickle Down Impact of Student Loan Debt

David McRae
The following Op-Ed was written and submitted by State Treasurer David McRae 

Today, Americans hold more than $1.7 trillion in student loan debt, and it’s having a tremendous impact on the way we live, work, and build our future. Here in Mississippi, students tend to graduate with about $30,000 worth of debt. In a state where the median individual income is just $24,500, that’s an outsized financial burden.

The consequences of this student loan debt go well beyond simple dollars and cents, however, often affecting workers’ take-home pay, future savings and retirement, and lifestyle.

According to a recent TD Bank survey, one-fifth of take-home pay is used to repay student loan debt, often surpassing car payments and even rent. Here’s where the trickle-down impacts begin.

With such a significant portion of one’s paycheck going to student debt repayment, many borrowers have less to spend, and more importantly, save. In fact, the vast majority of borrowers (61 percent) are putting away less than one-tenth of their income each month; many are saving nothing at all.

This lack of savings shows up in a multitude of ways. Nearly half (41 percent) of the TD Bank survey respondents reported delaying 401(k) contributions and about the same portion said they lack a rainy day fund, leaving many to max out credit cards for emergency expenses.

How this translates from finances to lifestyle is easy to see. The TD Bank survey found that 60 percent of student loan borrowers don’t take vacations. 36 percent delayed becoming a homeowner. 35 percent rarely dined out. 26 percent delayed having kids. 21 percent put off their wedding. The list could go on, but I think the bottom line has already become obvious: Major life milestones are getting postponed – or skipped altogether – because of student loan debt.

So, what do we do about it? Financial gurus advise borrowers to make the minimum monthly payment every month and, when appropriate, consider refinancing your loans.

Of course, for future graduates (and their families), the best thing to do is prepare. College Savings Mississippi, a division of your State Treasury, offers two Mississippi 529 plans that can help reduce – or eliminate – the need for student loans. Many families choose to lock in today’s tuition rates and prepay college altogether with MPACT, while others opt to contribute to a tax-advantaged savings account with MACS. There are huge advantages to both, so if you are a parent or grandparent it’s worth a look on our website to learn more.

Beginning on July 15, most Mississippi parents will begin receiving a monthly Child Tax Credit payment from the federal government. Consider investing those funds into your child’s education. To learn more, visit or call my office at (601) 359-3600.

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