Student Debt: Not Just a ‘Young Person’s Problem’

Student loan borrowers come in all ages, as do the cost pressures they face.

In the first quarter of 2025, 26% of all outstanding student debt was held by people age 50 and older, according to the U.S. Department of Education’s Federal Student Aid office. Among those in the 50-plus bracket, 30% of those with student debt had saved less for retirement than those without debt.

Borrowers between the ages of 25 and 34 hold 29% of student debt, while only 5% was held by those ages 24 and younger.

“When we think about student debt, the image a lot of us conjure is that of a recent graduate,” says Priya Punatar, director of workplace research at Fidelity Investments. “But the reality is: This is not just a young person’s problem.”

How Much Debt Costs

The total student loan debt outstanding was $1.78 trillion, as of October 2025, with 92.1% (or $1.64 trillion) held by 42.7 million Americans with federal loan debt accounts, according to the Education Data Initiative. Federal student loan debt has grown at an annual average rate of 7.03% since 2007.

Borrowers put an average of 22% of their income toward student loan repayments, including a 19% average for people in Generation X and an 11% average for Baby Boomers, according to Fidelity’s “2026 Student Debt Report.” Generation Z borrowers put an average of 30% toward their repayments.

Meanwhile, 32% of those currently paying off student loans said their student debt delayed their purchase of a home. While the delays were highest among Gen Z at 37% and Millennial borrowers at 36%, 16% of Boomers also reported postponing plans due to loan repayments.

Even among an older population of homeowners, financial pressure mounts due to expenses other than student loans.

According to the Harvard University Joint Center for Housing Studies’ “State of the Nation’s Housing 2025 Report,” between 2019 and 2023, the rate of homeowners 65 and older who spent more than 30% of their household income on housing and utilities rose to nearly 28% from 24%, reflecting an increase of more than 1.7 million homeowners over the four-year span.

Updates on Debt Delinquency

After the expiration, in September 2023, of a three-year moratorium on loan repayments that began during the COVID-19 pandemic, there was a one-year on-ramp period during which late or missed payments were not reported to credit bureaus. Since that on-ramp ended in September 2024, delinquencies and defaults have continued to rise.

Approximately 1 million borrowers’ loans went into default at the end of 2025, according to the latest Household Debt and Credit Report from the Federal Reserve Bank of New York. In the fourth quarter of 2025, 9.6% of balances were delinquent by at least 90 days.

While the Department of Education late last year announced it would begin to garnish the wages of anyone with defaulted federal student loans during the week of January 7, it later stated on January 16 that it would delay the implementation of garnishments. The delay is intended to enable the DOE to implement student loan repayment reforms under 2025’s Working Families Tax Cuts Act, allowing borrowers “more options to repay their loans,” according to the announcement.

Opportunities for Relief

Fidelity’s Punatar says employers have “more options than ever before” to help address the student loan debt issues, but which solution is “right” depends on the employer.

The SECURE 2.0 Act of 2022 allows employers to match employees’ student loan payments with retirement plan contributions. Section 110 of SECURE 2.0 allows employers to treat qualified student loan repayment the same way they would 401(k) deferrals. QSLPs must be made by the employee to pay qualified higher education expenses for the employee, a spouse or a dependent; are limited to the 402(g) elective deferral limit; and must meet certain certification requirements.

In addition, Section 127 of the Internal Revenue Code allows employers to provide tax-free assistance to employees who are continuing to pursue their education while working. It allows employers to offer an education assistance program, which provides employees with up to $5,250 in benefits that are generally tax-deductible by the employer.

Offering a student debt solution is part of offering an “integrated financial wellness package,” Punatar says. She explains an employee’s inability to pay down their student loans might affect their ability to take advantage of a crucial voluntary benefit, such as an emergency savings account.

Early-career employees, defined as those between 18 and 30, ranked emergency savings as their top financial worry in CAPTRUST Financial Advisors’ “Financial Wellness Survey Report: Silent Financial Stress in the Workplace,” released in January. Mid- and late-career workers still placed that worry in their top three.

Americans also increasingly have used their long-term retirement savings as a substitute for other emergency savings, according to recently published studies. For instance, in Allianz Life Insurance Co.’s “Q4 2025 Quarterly Market Perceptions Study,” 51% of respondents said they had stopped or reduced retirement savings in the past six months due to the economic climate, and 47% of those surveyed reported dipping into retirement savings over the same period.

According to Fidelity’s research, 45% of respondents, including 52% of Gen Z borrowers, said they would stay with their employer longer if the employer offered a benefit to pay down their student loans. Overall, 17% said a student loan benefit would make them more likely to increase their retirement contributions, with Boomers—at 25%—the most probable to say so.

Some 54% of Boomer student loan borrowers were also likely to say they would both stay with their employer longer and increase their retirement contributions if they received a student loan repayment benefit from that employer, compared with 46% of Gen X, 37% of Millennials and 28% of Gen Z.

“Older generations especially have limited time to recover,” Punatar says. “They don’t have a long runway to build retirement readiness.”

Fidelity’s report was based on a survey of 747 U.S. adult borrowers, fielded October 1 through October 8, 2025. Allianz Life surveyed 1,005 U.S. adults in November 2025.