Boomers, Gen Xers Carry Bigger Student Debt Loads Than Milliennials: Fidelity
Workers in the private health care and social assistance industries had the most debt, Fidelity found.
In December, 2019 college graduates will start to pay back their student loans, now estimated at $1.6 trillion, according to data from the Federal Reserve.
Millennials predominate among student-loan debtors, but research released Tuesday by Fidelity Investments showed how paying down student debt also affects older people and workers in various industries.
In fact, baby boomers and Gen Xers in the study bear a bigger burden than millennials: average monthly payments of $565 and $490 on average balances of $56,652 and $55,870 with average interest rates of 6.3% and 5.6%.
This compares with millennials’ average payments of $469 a month on a balance of $45,548, with an average interest rate of 5.6%.
Workers in the private health care and social assistance industries pay far more than those in other sectors: $685 a month on average on an average loan balance of $75,336. Here’s how much employees in other sectors pay on average:
- Higher education: $563 on $60,758
- Professional scientific and tech services: $543 on $55,167
- Nonprofit health care: $515 on $56,996
- Information services: $487 on $47,812
- Manufacturing: $465 on $44,062
- Business management: $446 on $45,917
- Real estate: $434 on $42, 418
- Transportation: $413 on $43,964
- Retail trade: $406 on $42,266
Fidelity examined data from some 30,000 users of its Student Debt Tool who represented upward of 4,400 companies as of Sept. 30.
“Our research consistently shows that student debt can have a devastating impact on the financial wellness of many Americans, causing them to delay life events such as buying a home, getting married, having children and saving for retirement,” Asha Srikantiah, head of Fidelity Investments’ student debt program, said in a statement.
According to Fidelity, 19% of Student Debt Tool users reported contributing nothing to their 401(k), and 24% contributed only between 1% and 5% of their salary.
Overall, 13.9% reported having an outstanding loan against their 401(k). Fidelity noted that such loans can have a big negative effect on 401(k) balances, particularly those of younger retirement savers, who have a longer time horizon and as a result, greater potential in their early years to save more.
End-to-End Solution
Finding effective ways to pay down student debt is a challenge that can be quite different depending on the debtor’s stage of life — whether it’s a question of paying off debt, understanding how much debt has been accumulated or saving for a child’s education.
The Student Debt Tool is designed to address the issue of knowing where one stands by helping see all accumulated student loans in one place and the options available for repayment.
The tool is a component of Fidelity’s Student Debt Benefits program, which provides borrowers a singular view of a variety of federal and private loan options.
Pre-College Planning Resources addresses the issue of taking on too much debt by offering targeted education and resources to help families plan, save and pay for college.
Fidelity also offers access to a student debt refinancing platform, Credible.com, through its Student Debt Tool. This gives users the ability to compare pre-qualified rates from up to 10 refinancing lenders without affecting their credit score.
Credible helps users refinance their loan with the lender of their choice. According to Fidelity, Student Debt Tool users in the near future will get a $750 bonus from Credible once they close on a refinancing loan.
“What we have learned this past year is growing numbers of companies are increasingly aware that helping employees address the issue of student debt can help improve their overall financial wellness, which can in turn have a positive impact from a business perspective in a host of ways,” Srikantiah said.
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