People are living longer than ever before and borrowing student loans in much larger amounts, though there is no data about the intersection of these phenomena researchers from the MIT AgeLab told NASFAA members.
That’s what inspired researchers Julie Miller and Samantha Brady to conduct focus groups with 83 borrowers ranging from the ages of 25 to 75 to determine how the burden of carrying student loans affected their long-term planning. Specifically, they sought to determine how student loans impact borrowers’ decisions about spending and saving, such as plans for retirement and care. They found that about half of those they surveyed said they were not currently saving for retirement because they “could not afford to,” citing other financial obligations, such as student loans, as the reason they neglected to plan for the future.
Miller and Brady found that the age group that reported the greatest impact from student loans was 36 to 50, which they explained was troubling because that age range included a crucial time to save for future care and retirement.
The researchers emphasized that financial literacy plays an important role in this conversation, and were surprised to find that many of the members of their focus groups were not aware of the best ways to manage their loans and balance their other financial commitments, specifically those over the age of 50. They challenged conference attendees to think about whether preparing student loan borrowers for retirement falls under the responsibility of an institution or a financial aid office, and argued that the current system for loan counseling is not enough to prepare borrowers to successfully pay off their loans and plan for their future.
Publication Date: 6/25/2018