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STUDENT DEBT STILL WEIGHING DOWN GEN X

Published Feb 07, 2024 at 11:09 AM EST Updated Feb 08, 2024 at 8:26 AM EST


00:57
Millennials Struggle To Repay Debt As Rates, Balances Spike
By Suzanne Blake
Reporter, Consumer & Social Trends
FOLLOW

27
Share



When many think of the student debt crisis, they picture young recent graduates
working in the service industry and unable to secure a job in the field they
paid for a pricy degree in.

However, the numbers are in—and it's not the younger generations struggling the
most to pay back their student loans. Instead, Gen X and Baby Boomers are behind
on their student loans more than any other age group, recent New York Fed data
found.



Across the country, student loan debt stands at $1.6 trillion as of last
quarter, and a hefty portion of that is held by the generations who went to
school before university costs tripled and inflation skyrocketed.

According to Alex Beene, a financial literacy instructor for the state of
Tennessee, the assumption that Gen X could avoid the student loan crisis because
of cheaper costs is wrong.


WASHINGTON, DC - JUNE 30: Student loan borrowers demand President Biden use
"Plan B" to cancel student debt Immediately at a rally outside of the Supreme
Court of the United States on June 30, 2023... WASHINGTON, DC - JUNE 30: Student
loan borrowers demand President Biden use "Plan B" to cancel student debt
Immediately at a rally outside of the Supreme Court of the United States on June
30, 2023 in Washington, DC. (Photo by Paul Morigi/Getty Images for We The 45
Million) More

"That fails to take into account that many in this age group have returned to
school countless times over the years to earn higher degrees and in turn racked
up significant amounts of debt," Beene told Newsweek.


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Gen X is also known as the sandwich generation, and their financial obligations
are often larger than either the Baby Boomers before them or the millennials
after them. Gen X routinely juggles paying off mortgages, helping their children
with college and young adulthood as well as caring for elderly parents who also
might require financial support.

"It doesn't come as a surprise to me that older Americans are struggling the
most with their student debt," Michael Lux, the founder of the Student Loan
Sherpa, told Newsweek.

Older Americans also saw the Federal Family Education Loan program terminated in
2010. Instead of getting out of their debt, though, they were stuck with
complicated loans and see some of the fewest repayment options, Lux said.


Read more
 * Biden's Ed Department Is Making College Less Accessible
 * Student loan tip from woman who had $155,000 debt wiped
 * Bankruptcies spike as Americans grapple with debt and inflation

Enrolling in an income-driven repayment plan can also entail "jumping through
many hoops," he said.

"Temporary programs have come and gone. Add in the well-documented struggles of
servicers tasked with helping borrowers navigate repayment, and you have a
recipe for confusion and falling behind," Lux said. "For new graduates,
repayment is by no means simple, but it is far less complicated than what most
borrowers older than 50 face."



And as Gen X and Baby Boomers face retirement, the consequences of their high
student debt could wreak havoc on their lives.

"If you're saddled with student debt, not to mention loans for a home, car, or
credit card, it could make the reality of retirement much further away than what
your age suggests," Beene said.

The average American with credit card debt also had $7,932 in unpaid credit card
bills last year, a New York Life's Wealth Watch Survey found, a sharp climb from
$6,321 the year before.



In this specific debt field, Gen X was also doing worse than other generations,
owing an average of $9,254 and contributing $312 each month. Baby Boomers
weren't much better, owing $8,288 and contributing $388 each month.

Gen Z and millennials, in comparison, owed an average of just $5,337 and $7,280
respectively.

When it comes specifically to student debt though, the larger system may very
well be at fault for Gen X, Boomers and others' difficulties in paying back
their loans, Fred Amrein, the CEO and founder of PayForED, said.



"The entire college admission process is built on access and not affordability,"
Amrein told Newsweek. "It is the largest financial borrowing decision that
people make without a third party approval."

Both Parent PLUS and Grad Plus plans allow parents or graduate students to
borrow up to the cost of attendance with no formal loan underwriting and a
minimal credit score. For many borrowers, this doesn't set them up for success.

"It is a highly emotional decision for parents," Amrein said, adding that
colleges only provide financial information for one year at a time.



And as many Americans begin to have children later in life, student loans are
more likely to derail your retirement plans, a situation Gen X is feeling
acutely right now.

"There is no transparency to the final cost and amount of debt for both the
student and parent to see," Amrein said. "They cannot project what the monthly
payment will be at graduation."

Are you struggling to repay your student loans? Newsweek wants to hear from you.
Contact us at personalfinance@newsweek.com.




UNCOMMON KNOWLEDGE

Newsweek is committed to challenging conventional wisdom and finding connections
in the search for common ground.

Newsweek is committed to challenging conventional wisdom and finding connections
in the search for common ground.


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ABOUT THE WRITER

Suzanne Blake
FOLLOW


Suzanne Blake is a Newsweek reporter based in New York. Her focus is reporting
on consumer and social trends, spanning from retail to restaurants and beyond.
She is a graduate of UNC Chapel Hill and joined Newsweek in 2023. You can get in
touch with Suzanne by emailing s.blake@newsweek.com.

Languages: English

Suzanne Blake is a Newsweek reporter based in New York. Her focus is reporting
on consumer and social trends, spanning ... Read more

To read how Newsweek uses AI as a newsroom tool, Click here.








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