Boomers, Gen Xers Struggle With College Debt, Survey Finds
Ben Lewinger, 37, would love to start thinking about saving for retirement, but it’s not really in his frame of reference right now. The married Generation X member, a father of two, still has roughly $38,000 in college debt from loans he accumulated while pursuing a bachelor’s in comparative religions from Tufts University in 2002 and a master’s degree in Asian religions from the University of Hawaii in 2008.
Sonja Fisher, a 48-year-old baby boomer, isn’t anywhere close to the level of retirement saving she wants. She was laid off from her job in February as a pre-sales engineer. She is weighing her career options but needs full-time employment soon. She has been paying down about $120,000 in college loans accumulated as a result of an MBA she earned in 2001 and a doctorate in 2013 after earning bachelor’s degrees in mathematics and statistics in 1992 from the University of Minnesota.
The frustrations and stress of trying to repay college debt while saving for retirement is not limited to millennials, a new survey from IonTuition has found. Student loan debt currently spans three generations, according to the U.S. Government Accountability Office.
The college debt problem remains widespread
IonTuition surveyed 909 adults older than 35 who have taken out or co-signed for student loans – federal, private, and Parent PLUS. The findings run counter to claims that most college graduates pay off loans before age 35. Instead, 50 percent of Generation Xers are still paying off loans after that age and 14 percent of boomers are, too. Some 40 percent and 18 percent of Gen X and boomers respectively are behind on loan payments.
As a result of their need to pay off student loan debt, many of those surveyed are delaying retirement. More than one-third (35 percent) are not confident that their savings will enable them to retire in comfort, while 11 percent know they will not retire on time. The median retirement savings balance with loans is $31,000. Without the loans payments, it would be $56,000.
“If I didn’t have student loans, I would have more freedom to do the things I want to do,” Fisher said. “The government doesn’t do much to help.”
College debt, in most cases, cannot be discharged through bankruptcy. It has to be repaid, and failure to do so can jeopardize retirement funds. Social Security payments can be garnished to pay off outstanding student loan balances. In fiscal 2015, $171 million in retirement savings were taken to pay on the defaulted students loans of borrowers age 50 and older, the GAO reports.
More student loans mean more college debt
On top of trying to pay off their own college debt and save for retirement, older generations are going into debt to fund their children’s college educations. Three quarters (75 percent) of those polled said they had to co-sign for a college loan. Thirty percent said their offspring did not qualify for a loan due to their credit scores, while 47 percent reported that their kids had reached the limit of or did not qualify for federal student aid. And 22 percent reported that loans and aid fell short of paying entirely for tuition, so that was why they co-signed. Nearly half (48 percent) of those who did co-sign worry that the debt may not be repaid.
If she could do things over again, Fisher said she might not have gotten her doctorate. “Borrowing that much money that late in life probably was not a good idea.” Although she has degrees in subjects that are in demand, recent changes in technology mean the jobs have shifted toward programming, and she wants more of a people focus in her work, like the pre-sales engineer position she previously held.
Fisher knows a lot of other people who are also unemployed and face huge amounts of college debt. “Something needs to change,” she added. “All that schooling. What was it for?”
Lewinger recently refinanced his loan to lower the payments for three years due to cash flow issues. He has about $8,000 in a 401(k) savings but is unable to participate in his employer’s generous 401(k) match program. He aims to be debt free by 2025 but does not know whether he’ll make that goal.
Both suggested that those starting out to fund college as frugally as possible and start saving early for retirement, even if it’s just a small amount. “Pay off your loans even while you are still in college,” Lewinger advised. “It gets you in the habit and you know what it will be like to carry college debt for 10, 15 or 20 years.”