Student Loans Stump Boomers

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. Further, 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 burdened with over $1.3 trillion in student loan debt—and 70% of students graduate from college with such debt, averaging $37,172. Forty-four percent of Millennials carry student loan debt, as do 26% of Gen X and 13% of the Boomers.

Overall, 74% of the survey respondents are still paying off student loans, and 54% think their payments are too high. Sixty-one percent of Gen X folks say they are having trouble paying back the loans, while this is true for 30% of Boomers.

The cause of much of the student loan debt, according to IonTuition, has been the reauthorization of the Higher Education Act, which since the 1990s,  has qualified all Americans for student loans, regardless of income. In addition, the law permits borrowers to repay the loans over 30, rather than 10, years, 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 Americans are 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 unable to pay back their student loans that their Social Security benefit can be garnished to cover the expense. In fact, in 2015, $171 million in Social Security payments were garnished to do just that. The Government Accountability Office (GAO) recently reported that, in fiscal year 2015, 49.7% of collections of defaulted student loan debt were 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 assist with student loan repayment, 76% of Americans think it would be great if their employer offered 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.