Student loan debt is becoming more and more prevalent in the U.S., and as a result, many Baby Boomers are carrying this debt into retirement, and many members of Generation X are on track to do the same, IonTuition found in a survey of 909 people over the age of 35. Today, 44 million Americans are carrying over $1.3 trillion in student loan debt—and 70% of students graduate from college with student loan debt averaging $37,172. Forty-four percent of Millennials carry student loan debt, while 26% of Gen X and 13% of Boomers do so.
The reason why student loan debt is so prevalent, according to IonTuition, is because of the reauthorization of the Higher Education Act in the 1990s, which qualified all Americans for student loans, regardless of income. In addition, the law permits borrowers to repay the loans over 30 years, rather than, saddling them with monthly payments that average $300 or more for decades.
Furthermore, many older Americans are co-signing for their children’s student loans, as well as housing them once they graduate and paying for some of their expenses, such as cellphone and car payments.
There is a direct link between student loan debt and the fact that many older Americansare delaying retirement, according to IonTuition. People who have no student loans have a median retirement savings balance of $56,000, but it is only $31,000 for those with loans.
IonTuition warns retirees with student loans they cannot pay that their Social Security benefit can be garnished to pay the loans back. In fact, in 2015, $171 million of Social Security payments were garnished to do just this. The Government Accountability Office (GAO) recently reported that in fiscal year 2015, 49.7% of collections of defaulted student loan debt was generated from offsets of federal payments through the Treasury Offset Program, including but not limited to Social Security offsets.
Employers can provide a solution for this, IonTuition says. While only 4% of employers provide assistance with student loan repayment, 76% of Americans think it would be great if their employer provided resources to help them manage this debt. Over one third, 36% ,would prefer student loan repayment benefits from their employer over a 401(k), and 29% would prefer these benefits over health benefits.
“Based on our findings, it is likely that Millennials will continue to carry student loan debt late into life much like Generation X and the Baby Boomers,” IonTuition concludes. “American companies are famous for pioneering changes to the workforce [such as] flexible hours, telecommuting and job-sharing.” Offering workers assistance with repaying their student loans could be the next frontier.
IonTuition’s findings are based on a survey of 909 people 35 or older who have a student loan.