Is Student Loan Debt a Ladder Up or a Weight Down?

It was Aristotle who said: “The roots of education are bitter, but the fruit is sweet.” It could be a headline for the latest paycheck-to-paycheck study from PYMNTS, which found a mix of regret and pride among the parents and students who have gone into debt to finance their education.

It’s an issue that has been in the headlines lately. Federal student-loan payments are back, and requirements are tightening. Pandemic-era relief that set interest to 0% ended in September 2023, with payments resuming the next month. This summer, the Education Department said loans held in forbearance will begin accruing interest Aug. 1, following court actions that halted parts of that income-driven plan. Those shifts have put repayment back on the calendar for millions and raised the stakes for households already stretching to cover bills.

The burden falls heaviest on the paycheck-to-paycheck customer. PYMNTS data shows that as of July 2025, 71% of U.S. consumers live paycheck to paycheck. That’s about 186 million people. Nearly one in five of these consumers says education expenses are part of why their budgets are tight. Within this group, opinion is split on education’s payoff: 52% say their degrees lifted earning power enough to justify the cost, while 48% say earnings fell short of expectations.

Regret sits alongside resolve: 37% regret their financial choices about education, yet 63% would make the same decisions again despite the hit to their finances.

A persona view shows four distinct mindsets inside this paycheck-to-paycheck cohort.

• “Payoff believers” (40%) say education boosted earnings and they stand by the choice.
• “Education loyalists” (23%) did not get an earnings bump but still value the experience.
• “Education regretters” (25%) neither saw a payoff nor would do it again.
• “Dissatisfied earners” (12%) gained financially but feel the trade-offs were not worth it, perhaps because the path took too long or the job fit disappoints.

These shares underscore that identical balance sheets can mask very different beliefs about the same debt. 

The cross-currents found in the data raise the question as to why students and parents opt for onerous debt. Behavioral research helps explain why. It shows first that defaults matter. When aid systems pre‑fill or highlight loan amounts, students borrow more than when they must make an active choice.

Students also form expectations about pay after graduation that are frequently off the mark. They later revise those beliefs when shown credible earnings data by major or program, underscoring how optimism and information gaps shape decisions. 

Then there’s the problem of overestimating the benefits of the debt. Present bias lowers the psychological cost of borrowing because benefits like enrollment and identity provide immediate gratification, a pattern widely documented in academic research. When doubts creep in, sunk‑cost effects make it harder to switch paths after time and money are invested, even if new information points to a different choice.

Finally, the way costs are framed can blur trade‑offs. Federal watchdogs have found many financial‑aid letters mix grants and loans and omit true net price, conditions that can lead students to view all “aid” as comparable. 

Now for the parents. Parents typically view college spending as an intergenerational investment and shoulder a large share of costs. The Sallie Mae “How America Pays for College” report found nearly three‑quarters of families rely on parent income and savings, and nearly half borrow to help pay for education. Many also misunderstand offers: one in five families whose award letters included loans believed those loans had to be taken if offered, and one in five were unaware that loans can appear in aid packages at all.

Risk is shared for parents who co‑sign private student loans. They share full legal responsibility for repayment, yet do not directly benefit from future wages. Co‑signer release, which is often marketed as a safety valve, is rarely granted, according to the CFPB.

Price opacity compounds the problem: a Government Accountability Office (GAO) review shows most colleges do not provide clear, standardized aid offers or accurate net‑price estimates, making it harder for families to compare options and plan multi‑year affordability. 

The findings portray a large segment of consumers balancing aspiration with arithmetic. When seven in 10 Americans live paycheck to paycheck, and nearly one in five of them cite education costs as part of the squeeze, student-loan rules become household cash‑flow policy.

The personas indicate that messaging, repayment options and hardship tools should be tailored to mindset as much as math. Some borrowers want evidence that the investment is still paying off. Others want faster ways to exit a path they regret.

For lenders, servicers and schools, clarity and frictionless enrollment into affordable plans matter more than ever as borrowers navigate the return to repayment and renewed interest accrual. PYMNTS Intelligence data suggest these pressures will remain central to household budgeting in 2025.

A PYMNTS report, “Modernizing Higher Education Payments: The Case for Unified Commerce,” highlights how siloed, legacy payment systems continue to absorb valuable resources and obscure financial visibility within higher education institutions. Many colleges and universities still depend on fragmented, analog payment systems, which introduce inefficiencies that disrupt cash flow and diminish student satisfaction.

Only a third of Americans receiving student loan bills are paying them. So said Bloomberg in a report published Monday (Aug. 11), which cited an April estimate by the Department of Education and added that a collective $1.6 trillion in student loans is owed by Americans.

Some borrowers who are ignoring their student loan bills told Bloomberg that they are prioritizing housing, groceries and other essentials. They said they are also protesting the Republican legal challenges that stopped President Joe Biden’s plan to forgive the loans; or they think the loans “don’t feel real” after the U.S. government paused the requirement to repay the loans for five years due to the pandemic.

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