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Pencils Down


The bright yellow school bus might be the first sign. Pumpkin orange or red leaves another. Fall stands for many colors, but green is still among them.

You don’t need to have kids heading back to school to register that the cost of education is only getting steeper. As of 2019, Americans held approximately
$1.5 trillion in student loan debt. The longer that you look at that statistic, the more you see: this isn’t “just” a problem for young adults starting out in the world. Borrowers of all ages- parents and grandparents alike- are sacrificing their own retirements in order to repay student debt.

Over three-quarters of Americans report that outstanding student loans are negatively impacting the amount that they are putting aside for retirement. And in some cases, the outcome is even worse than usual when the proverbial can gets kicked down the road. Prolonged student debt can result in Social Security benefits being garnished decades later. In one year alone, older borrowers had their benefits offset to repay defaulted federal student loan debts to the tune of $171 million.

Any discussion of the school debt crisis in this country must take into account the fact that both bookends of the population have a stake in its resolution. Being prepared for retirement isn’t a simple process that begins a few years before leaving the workforce. If we can find a way to balance the indisputable benefits of education with its real costs over time, then we can all ace this test.

Fast Fact:

The number of consumers over 60 with outstanding student loan debt quadrupled between 2005 and 2015, from 700,000 to 2.8 million.

Source: Consumer Financial Protection Bureau, January 2017

 

Over 36% of borrowers of loans for a child or grandchild admit to never speaking with family about those school loans.

How retirement planning, school debt, and family dynamics can add up to financial strain.

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Who should pay when a parent defaults on an adult child’s Parent PLUS school loan? 

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This summer, California became one of the first states to facilitate retirement savings through an innovative program called CalSavers.

Will other states follow?

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