(BPT) – Student loan debt in the U.S. has been skyrocketing for years, recently topping $1.5 trillion, and now surpassing automobile loans and credit cards to become the largest source of personal debt, aside from mortgages. Millennials bear the brunt of that burden, with 75 percent of the generation carrying some form of college debt. But the problem isn’t contained to the younger generation. According to a new white paper from The Guardian Life Insurance Company of America(R) (Guardian), baby boomers are increasingly feeling the strain of student loan debt – and it’s having a major impact on their overall well-being.
While much of the conversation about student loan debt has centered around millennials, proportionally, boomers have actually experienced a larger share of the nation’s ballooning student debt. Over the last five years, the largest increase in student loan debt in the U.S. is among 60- to 69-year-olds, who have experienced a 72 percent increase in their loan balances, often leaving boomers with no choice but to tap into their retirement savings or Social Security payments to pay off the debt.
Impact on well-being
While many baby boomers took out these student loans for their children and grandchildren, it’s the older generation that is feeling the impact. More than 50 percent of baby boomers say that college debt is negatively impacting their ability to meet financial goals, such as maintaining their lifestyle in retirement or being able to afford adequate health insurance. As a result, some baby boomers have been unable to retire, and more retirees are having their Social Security payments garnished, mostly to pay for student loans they took out for their families.
‘These consequences are affecting the quality of life for boomers who are nearing or in retirement and adding financial stress,’ said Guardian Director, Product Management Andrew Hutchison. ‘Boomers have stretched their financial resources to fulfill their children’s or grandchildren’s college dreams, severely impacting their ability to meet their financial goals or maintain their lifestyles.’
Paying down student debt with help from employers
With mounting student debt totals and the high-stakes impact on financial and retirement goals, employers are taking notice and exploring new benefits focused on financial wellness that workers of all ages and their families can utilize to help ease the stress of having debt. Whether it’s boomers, Gen Xers or millennials, more are increasingly turning to these three methods for student debt relief:
* Student loan repayment plans – A growing number of employers offer student loan assistance plans. Eventually, with passage of more favorable tax laws, employers could tie a student loan repayment plan to their 401(k) and allow workers with college debt to re-direct contributions to help them pay down their loan.
* College tuition rewards – Some boomers and millennials alike are finding much-needed relief through their college savings plans at work. For example, Guardian now offers a college tuition benefit where members enrolled in a Guardian plan can earn $2,000 in annual tuition rewards that can be used at nearly 400 institutions. The annual rewards can be transferred to eligible relatives, a huge benefit considering seven in 10 parents say they plan to use some of their retirement savings and investments to pay for their children’s college education.
* Debt management resources – Refinancing your student loan debt can be one way to mitigate the impact on your lifestyle. Many employers offer access to third-party debt management firms that offer options such as guidance on loan consolidation, income-driven repayment plans and loan forgiveness that can ease the burden of student loans.
Breaking the debt cycle
Resolving the student debt crisis will likely require a joint effort between colleges and universities, the federal government and employers. As boomers grapple with the impact of student loan debt, perhaps their experience can motivate younger generations to overcome their own debt so they can create savings plans and financial strategies to avoid falling back into debt as they age. A new wave of student loan and college education benefits is arriving, and workplace solutions and offerings are expanding to assist with these shifting financial needs for workers of all backgrounds.
The Guardian Life Insurance Company of America, New York, NY. Guardian(R) is a registered trademark of The Guardian Life Insurance Company of America. The Tuition Rewards program is provided by SAGE CTB, LLC. Guardian does not provide any services related to this program. SAGE CTB, LLC is not a subsidiary or an affiliate of Guardian. Guardian reserves the right to discontinue the College Tuition Benefit program at any time without notice. The College Tuition Benefit is not an insurance benefit and may not be available in all states.
Unless otherwise noted, the source of all information here is Guardian’s 6th Annual Workplace Benefits Study, Financial Wellness Series, Part 1; Group & Worksite Marketing Study, ‘College Debt in America: The Case for Loan Repayment Benefits‘
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