Millions of Americans owe money in student loan form. And you may be inclined to believe that the overwhelming majority are those in their 20s and 30s who graduated college not so long ago.
But younger borrowers are far from the only ones with student loans hanging over their heads. The reality is that borrowers across all generations owe money for student debt. And you may be surprised to learn that older Americans are most likely to have the highest student-loan payments.
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Older borrowers have bigger payments to grapple with
A good number of Americans in their 60s, 70s, and beyond owe money in the form of student debt. Data from TransUnion reveals that more members of the silent generation and baby boomers have payments over $500/month than younger generations.
Only 5% of Gen Z borrowers and 20% of millennial borrowers have student loan payments amounting to more than $500/month. By contrast, 29% of Gen Xers owe more than that. And 30% of baby boomers and members of the silent generation (the generation that preceded boomers) owe upward of $500 a month.
Being older and owing money in student loan form can be very problematic. For Gen Xers, some of whom are inching closer to retirement by the day, being on the hook for monthly loan payments could mean letting IRA or 401(k) plan contributions fall by the wayside.
Meanwhile, for baby boomers and members of the silent generation who are already retired, those monthly student debt payments are apt to be a major burden. Retirees commonly live on fixed incomes that consist largely of Social Security, with little wiggle room for extras. Carving out more than $500 a month in student loan payments likely means that a lot of borrowers in this situation are struggling financially.
Don't let student loan debt linger too long
One reason so many people end up carrying student loan debt later in life is that they continuously refinance their loans -- and extend their repayment periods in the process -- in order to reduce their monthly payments. Doing so might allow for some temporary relief. But it might also cause a scenario where that debt lingers all the way into retirement.
A better bet is for younger borrowers to get ahead of their debt while they can. That means making extra payments, not smaller payments.
While that may seem easier said than done, let's remember that these days, recent college graduates have access to the gig economy and the many income-earning opportunities it tends to produce. That's something older generations didn't have similar access to. (Of course, housing and living costs were also way more affordable 30 or 40 years ago than they were today, so there's that.)
Student debt can be largely problematic at any stage of life. But it's best to avoid carrying it into retirement because, at that point, it might result in a world of financial pain.
