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Julie Ryder Lammers
When we talk about the student debt crisis in the U.S. today, images of newly minted college graduates in their 20s or early 30s usually come to mind. There’s no denying that Millennials are coping with the largest student loan burden in our nation’s history (until of course Gen Z finishes college) and they’re stressed about it. A recent survey we conducted of young workers showed that 56% worry about repaying their loan either all the time or often, while 40% report that worrying about their student loans has impacted their health. Additionally, more than half of young workers report that right now, paying off student loans comes first, and they will put off saving for retirement until later.
That’s troubling, given that U.S. households nationwide already face a total $4.13 billion retirement savings shortfall. A late savings start for Millennials could spell economic disaster 30 years from now.
Unfortunately, though, we may not have to wait 30 years to see the impact of student debt on retirement savings. That’s because older Americans right now are already feeling the pinch of trying to pay off their own education loans, or those of their children, as they prepare to enter what’s supposed to be the Golden Years.
Our newly updated report, Retirement Delayed: The Impact of Student Debt on the Daily Lives of Older Americans, explores how older generations of Americans are dealing with more student loan debt than ever before. Thanks to a combination of extended loan terms that allow student loan borrowers to repay over longer periods of time, and a dramatic increase in parents borrowing for their children’s college, more older Americans are now carrying college debt into their 50s, 60s and beyond.
Some older student loan borrowers will have no problem retiring the debt but many more will struggle under its yoke and face financial insecurity later in life. They may be forced to work through retirement age or face having their Social Security wages garnished if they’re unable to voluntarily pay.
Retirement Delayed provides a series of recommendations for policymakers to help alleviate this increasing burden, from ways to decrease college costs for future borrowers, to strategies for helping those who have already borrowed to more effectively manage the debt.
Ultimately, it’s imperative we do something to head this problem off before it gets any bigger because as the report documents, this is only the tip of the iceberg. Think about it: Over 30 years ago, only approximately 4.21% of the enrolled population borrowed in order to attend college and the average debt total was only about $5,000. And yet there is a portion of that small percent still trying to pay back their debts. Today, 68% of all students attending a public or nonprofit college borrow student loans with the average debt amount for an undergraduate now reaching well over $30, 000 upon graduation. What will the “seniors with student debt” picture look like when the Millennials hit retirement age? We can only surmise it will be much bleaker.