Americans’ ballooning student loan debt is hardly a new issue, but it may come as a surprise to many that Baby Boomers hold more student debt than any other generation in the US.
It is indeed strange for a generation that graduated college several decades ago to have more student loan debt than any other group, but there are a few possible explanations for this which we’ll get into later.
This surprising finding was revealed by a pension manager and broader financial services company Fidelity Investments in its 2020 Student Debt Snapshot.
Researchers at the firm looked at the outstanding student loan debt of over 250,000 Americans and found Boomers to have an average monthly student loan payment of $722, compared to $623 and $588 for Gen Xers and Millennials, respectively.
As for their outstanding student loan balance, the average baby boomer owes $75,000, while members of generation X and Millennials owe $69,000 and $52,000.
Why Do Baby Boomers Still Have So Much Student Debt?
Fidelity Investments offered an explanation as to why many Boomers still have so much student loan debt despite them graduating several decades.
Specifically, researchers at the financial services firm noted that it’s partly due to many Boomers co-signing parent PLUS loans for their children’s college tuition fees.
Co-signing any type of loan can negatively impact your own credit score if the repayments are late, so parents should approach the matter cautiously and only opt for a parent PLUS loan if they are certain they’ll be able to meet their financial obligations, the firm stressed. If you’re already in this situation, you should consider a refinancing parent PLUS loan option, as you can qualify for lower rates and you can even transfer the loan to your child if needed.
The Importance of Erasing Student Debt
Given the continued growth of the US’ total student loan debt, it’s fair to say that most graduates are struggling to pay off their debt and move towards a debt-free life.
However, there are many things you can do to better manage your debt. For example, deferring luxury expenditure – such as buying a new car or going on a holiday to an exotic place – and instead of using that money to make a dent in your debt can make all the difference over the course of several years.
Furthermore, planning ahead and trying to save some money to help pay for your children’s college fees can be a great way to help reduce the debt burden they take on.
Asha Srikantiah, head of Fidelity Investments’ student debt program, stressed that it’s important to prioritize paying off any type of debt.
“Fidelity’s research shows when it comes to financial wellness, taking on debt is one of the most negative events. Conversely, paying off debt is one of the most positive — financially, as well as with health, work and life overall,” Srikantiah said.
A Quick Summary
- Baby Boomers hold more student loan debt than any other generation in the US, research by Fidelity Investments has revealed.
- Specifically, the average boomer owes $75,000, while members of generation X and Millennials owe $69,000 and $52,000, respectively.
- This may seem odd, given the fact that Boomers graduated several decades ago.
- However, it’s important to note that for many Boomers, their student loan debt was topped up as a result of them co-signing loans of their children.
- The US’ total student loan debt is continuing to balloon every year, but it remains possible to manage and eventually pay off your debt so long as you prioritize it once you start working.