Age Is Just a Number? Not When It Comes to Student Loan Repayment

While the student loan struggle is seen as widely a Millennial issue, a new survey from ionTuition shows that Generation Xers and Baby Boomers also are struggling with student loan repayment, which is impacting how they plan for retirement. 
According to ionTuition, an education-fintech company, 44 million Americans held over $1.3 trillion in student loan debt in 2017. And while the majority of that debt is held by younger generations, the number of student loan borrowers has increased an average of 256 percent across all age groups since 2004. In fact, data from the Government Accountability Office (GAO) indicate that 26 percent of Generation Xers and 13 percent of Baby Boomers carry student loan debt, compared to 44 percent of Millennials. 
To better understand the issues older generations face regarding the student loan debt they carry, either for themselves or for others, ionTuition surveyed 909 U.S. adults over the age of 35. These adults have either taken out their own federal loans, private loans, or Parent PLUS loans.
Among survey respondents, 74 percent—50 percent of Generation Xers and 14 percent of Baby Boomers—said they are still paying off student loans, challenging the presumption that college graduates can be expected to pay off their debt by the age of 34, typically within the 10-year standard repayment period. In fact, 27 percent of Generation Xers and 14 percent of Baby Boomers said they have held their student loan debt for 11 years or longer.
Fifty-four percent of overall respondents also said that their student loan payments are too high, and 17 percent said they are not confident the will be able to pay off their student loans.  When broken down by age group, 61 percent of Generation Xers and 30 percent of Baby Boomers said they have experienced difficulty making student loan payments, including:
  • 40 percent of Generation Xers and 18 percent of Baby Boomers who have fallen behind on their payments, and 
  • 19 percent of Generation Xers and 6 percent of Baby Boomers who have defaulted on their loans.
Many student loan problems are not unique to Millennials, but there is a significant challenge faced by older student loan borrowers: helping their kids pay for college in the form of co-signing a federal or private student loan. And older borrowers are feeling the pressure of those signatures. According to ionTuition’s survey, 75 percent of those who reported co-signing a loan have had to assist with payments on those loans, and 48 percent said they are concerned the borrower for whom they co-signed might not repay the loans. 
Generation Xers and Baby Boomers also said that they provide additional financial support to those for whom they have co-signed loans, including: 
  • 49 percent who said the individual lives with them; and
  • 32 percent who said they provide support for some of their expenses, such as car payments or cell phone bills.
A significant majority of respondents – 72 percent of Generation Xers and 94 percent of Baby Boomers – said they did not expect to be repaying student loans at this stage of life, and 60 percent said repaying student loan debt is impacting their ability to save for retirement. Thirty-five percent of respondents said they are not confident they will be able to retire comfortably and on time through their savings, and 11 percent said they were already sure they would not be able to do so. 
As a result, many of these older student loan borrowers are delaying their retirement, including 65 percent of Baby Boomers who said they plan to work past 65. Thirty percent of Generation Xers have withdrawn money early from their retirement plans, such as 401(k) plans, to pay off student loan debt. 
Older student loan borrowers also said they would like to see more employer assistance for their student loans, a sentiment echoed by their younger counterparts in a recent American Student Assistance (ASA) survey.
According to the ionTuition survey, 76 percent of older borrowers said it would be “great” if employers offered resources to help them manage their student loan debt responsibly; 36 percent said they would prefer benefits tailored to student loan repayment like contribution-matching or automatic payroll deductions; and 29 percent said they would prefer student loan repayment benefits over health care benefits. Respondents also said it would be helpful to have access to available student loan repayment plans, or an online platform with calculations, notifications, and budgeting tools to help with repayment.


Publication Date: 4/12/2017

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