Among Those Graduating College with Debt: - 34% say they have sold
 possessions to make ends meet - 42% say they live 'paycheck-to-paycheck' -
         27% say they delayed getting a medical or dental procedure
Material Granny? 31% with Outstanding College Loans Say Madonna Will Become
                a Grandmother Before Their Debt is Paid Off
Failing Grades: One-Third of Indebted Graduates Give Parents 'D' or 'F' for
                           Financial Preparations
      9-in-10 Say Graduating Without Debt is a 'Big Advantage in Life'

    NEW YORK, May 26 /PRNewswire-FirstCall/ -- College debt has a profound
effect on well-being, financial security, and career and lifestyle choices
for years after college, according to "The College Debt Crunch," a survey
of college graduates released today by AllianceBernstein Investments, Inc.
    "Large amounts of college debt put graduates in a hole that can take
years, even decades from which to emerge," said Richard A. Davies, Senior
Managing Director, Retirement and College Savings Plans, AllianceBernstein
Investments, the retail asset management arm of AllianceBernstein, L.P.
"Funding a college education isn't just about those four years; it's about
a young adult's ability to start a family, buy a house and, ultimately,
even to one day retire.
    "College funding is a fundamental financial and life planning issue,"
Davies said. "When you saddle young adults with debt, they're not just
borrowing their college tuition; they're borrowing from their future."
    The Internet poll of 1,508 college graduates ages 21 to 35 examined
their college finances and experiences, as well as their current
circumstances, attitudes and lifestyle. The poll was conducted between
April 24 and May 1, 2006 by the national polling firm of Mathew Greenwald &
Associates, Inc.(1)
                     The Real World: College-Debt Edition
    College debt can have a profound effect on quality of life. While the
first decade out of college is financially challenging for many people, it
is particularly so for those with college debt.
    Asked whether they would describe themselves as "living paycheck-to-
paycheck," 42% of respondents with college debt said that described them
"very well" while only 24% of those who graduated without debt said so.
Moreover, more than one-third (34%) of those with college debt reported
having sold personal possessions such as furniture, clothing and CDs to
make ends meet - compared with just 17% of the debt-free.
    For parents and students alike, the stakes are rising quickly.
According to the College Board, over the past decade total charges (defined
as tuition, fees, room and board) at private four-year university have
risen at an average annual rate of 5.3% and total charges now average
$29,026 per year; at four- year public colleges the average annual increase
has been 6.0% and total charges now average $12,127 per year.(2)
    "College financing is a challenging issue for most American families,
and the fact that college costs are climbing much faster than the rate of
inflation does not make it likely that the problem will go away anytime
soon," Davies said. "The problem is that the full dimension is not felt for
years afterwards. It's as if survey respondents are saying, 'If only I knew
then, what I owe now.'"
    Not surprisingly, those who graduate college without debt remain in a
much better financial position for years afterwards.
    Respondents who graduated with no college debt are also more likely to
be satisfied with their current savings levels (42% vs. 23% for people with
debt), express a much higher level of financial satisfaction (52% vs. 32%)
and have higher accumulated average savings ($53,900 vs. $36,500).(3)
                   College Debt: Here Today, Here Tomorrow
    College debt is not easily eliminated. Sixty-nine percent of
respondents who reported that they or a spouse had undergraduate and/or
graduate debt are still paying it off - not surprising, perhaps, given that
respondents were one-to-15 years out of school. The average outstanding
balance is more than $29,000.
    Of those who are still paying off household college debt, 39% said it
will take them more than 10 years and 31% said pop icon Madonna will become
a grandmother before they finish paying off their college loans.
    "College debt is not here today and gone tomorrow," Davies said. "For
these young adults the situation can be even worse than it appears as they
are typically carrying credit card debt, car loans and even mortgages. For
too many young adults, the designation 'Generation Debt' can be an apt
one."
    Forty-three percent of respondents with college debt used a credit card
to pay tuition and/or other college expenses. Of those, almost one-third
(32%) carried that debt for more than five years.
    Circumstances for those with college debt could get even worse if
interest rates rise further. More than half (53%) of those in households
still paying off college or graduate school debt say a continued rise in
interest rates would have a "major impact" on their ability to pay off
education debt. As it is, about three-in-10 (29%) said they regularly or
occasionally skip payments.
    College debt has a personal downside as well. Of respondents in
households that are still paying off college or graduate school debt, 48%
said that education-related debt had contributed to feelings of anxiety or
sleeplessness, 38% said it had contributed to depression, 34% said it had
contributed to arguments with a spouse or significant other and 24%
reported that education debt had contributed to compulsive shopping or
spending.
                 Life Events Delayed, Career Dreams Deferred
    The impact of college debt is not just a financial one. The results of
the survey also showed how college debt can affect life events and career
choices.
    In terms of life events, respondents still paying off education-related
debt individually and/or for a spouse say their debt has required them to
delay some key "rites of passage" into adulthood:
      -- 44% have delayed buying a house
      -- 28% have delayed having children
      -- 32% were forced to move back in with a parent or guardian or live at
         home longer than expected.
    The indebted have even neglected some basic needs: 27% say their
financial situation has caused them to delay getting a dental or medical
procedure.
    Career choices are also affected by debt: among those graduating
college with debt, 43% report having postponed graduate school, compared
with 25% of the debt-free. Thirty-nine percent of those with college debt
said they had left a job they liked because they didn't make enough money;
that compares with 30% of those who left college without debt.
    It all adds up to less optimism about themselves and their careers.
Almost half (48%) of respondents with debt said they were below where they
expected to be at this point in their life when they graduated college; 34%
of respondents with no debt responded that way.
    "The numbers only tell part of the story. The psychological and
emotional underside of college debt does not receive the attention it
deserves," said Jennifer DeLong, Director, College Savings Plans, and
manager of AllianceBernstein's 529 plan offering, CollegeBoundfund(R).
"It's hard to feel like you're making progress in life, when 10 years after
graduating you're still receiving a monthly reminder of your college
obligations."
                 The Impact of College Debt Spans Generations
    The survey found that college debt hinders long-term prospects as well
as the ability to save for one's own children's college education.
    More than half (55%) of those with household education debt said that
debt has limited how much they've been able to save for retirement. Just
23% of those with household education debt said they save more each year
than they pay out in college loans or other debt obligations.
    College debt can also impact one's confidence in their ability to play
financial catch-up. Thirty percent of those with college debt (vs. 21% of
the debt-free) said they were not confident in their ability to make
investment decisions.
    Among those graduates who have or plan to have children, 24% of those
who graduated with college debt say they have started saving for their
children's college education; that compares with 32% of those who graduated
college without debt.
    "One goes to college for four years but can pay the price for 40
years," DeLong said. "But even more troubling is the way a failure to plan
for college can cross generations. Unless Americans come to understand the
long-term consequences of failing to save for college, too many of today's
parents will still be paying off their college loans at the same time
they're paying for their children's tuition."
    Of those with college debt, 47% said they think their family "should
have done more to save for college." That compares with 18% of the
debt-free. Just about one-third (32%) of those with college debt would give
their parents or guardians a "D" or "F" for their financial preparations.
                   Impact on College Choice and Experience
    The survey also found that college debt and college finances in general
had a large effect on the college years - from school selection to the
whole college experience. Better than one-in-five (22%) of those with debt
said their finances "greatly limited their college choice" and once they
got there the effect was also great. Seventy-six percent of respondents
with debt said they "worried about money a lot in college."
    While many respondents reported working at least part-time during
college, the experience was much harder on those with debt:
      -- 55% of respondents with debt said the jobs they held during college
         affected their ability to study - vs. 40% with no debt;
      -- 42% of respondents with debt said the jobs they held during college
         affected their grades - vs. 30% with no debt;
      -- 63% of respondents with debt said the jobs they held during college
         limited their ability to participate in extra-curricular activities -
         vs. 46% with no debt;
      -- 45% of respondents with debt said the jobs they held during college
         limited their ability to participate in internships - vs. 30% with no
         debt.
    Indebted or debt-free, all respondents agree that college finances
matter: 87% of all respondents agreed that "having money in college gives
you access to opportunities that can be beneficial to your future." Better
than nine-in- 10 (91%) of all respondents agreed that "people who graduate
without any college debt have a big advantage in life."
                  Lessons Learned: Financial Advice Matters
    The survey found that those who graduated college with debt and who
have engaged a financial advisor tend to fare significantly better than
those who go it alone.
    In households in which one or both spouses graduated with education-
related debt, 41% of those who use a financial advisor have paid off that
debt (vs. 28% of those without an advisor). Of those still paying off debt,
51% of those with an advisor expect to pay it off within seven years (vs.
38% of those without an advisor). Finally, just 18% of "advised" households
with education debt who have or are planning to have children say their
debt has significantly impacted their ability to save for a child's college
education (vs. 26% of those without an advisor).
    "Professional financial advice can make a big difference in one's
ability to pay off college debt and put in place a plan to ensure the next
generation isn't similarly burdened," Davies said. "When it comes to paying
for college, the good news is that you have 18 years to plan, there are
tax-advantaged solutions and you don't have to go it alone."
    ABOUT ALLIANCEBERNSTEIN INVESTMENTS
    For over 40 years, AllianceBernstein Investments, Inc., the retail unit
of AllianceBernstein L.P., has helped investors build and preserve wealth
by providing innovative investment solutions from a diverse line of
investment vehicles including mutual funds, college savings (529) plans,
retirement products and separately managed accounts.
    As a globally recognized leader in growth, value and fixed income
investing, AllianceBernstein services over four million client
relationships with approximately $146 billion in assets under management,
for both US and non-US investors, as of March 31, 2006.
    Our parent company, AllianceBernstein L.P., is comprised of three
additional businesses which combined had assets under management totaling
approximately $635 billion as of April 30, 2006.
    ABOUT THE SURVEY
    (1)  Of the 1,508 surveyed, 1,007 interviews were conducted with graduates
         who left college with at least some debt, and 501 who graduated
         college without debt.  In order to accurately reflect the views of
         all college graduates, the overall survey results have been weighted
         by education, gender and age to be representative of the U.S. college
         graduate population.  The margin of error at the 95% confidence level
         for the entire sample of 1,508 is plus or minus 2.5 percentage
         points.  The margin of error for those graduating with debt is plus
         or minus 3.1 percentage points and the margin of error for those
         graduating without debt is plus or minus 4.3 percentage points.

    (2)  College Board, "Trends in College Pricing," 2005

    (3)  Includes savings, certificates of deposit, stocks, bonds, mutual
         funds, retirement savings plans and other investments.

Link to this page: