Fidelity Expands Student Debt Help for Its Staff

Fidelity’s analysis found that those with student loan debt are more likely to withhold retirement contributions or take out a loan against their 401(k), which can significantly affect their ability to retire comfortably. 

This finding was derived from some 60,000 Fidelity tool users with more than 210,000 loans, representing more than 6,000 companies, as of Sept. 30. 

As Gen Z and millennials continue to be weighed down by debt from recent undergraduate and graduate programs, boomers are the most heavily burdened generation when it comes to average monthly payments, total balances and interest rates, according to data from Fidelity’s Student Debt Tool. 

Boomers owe $58,300 on average with monthly payments of $620, compared with Gen Z’s $27,900 and monthly payments of $480.

Fidelity said this is likely due to a combination of factors: career changes that require additional education, as well as loans taken out to finance a child or grandchild’s education, which often carry higher interest rates. 

What Borrowers Should Do Now 

Fidelity suggested several steps borrowers can take to ensure a smooth transition as they prepare for the end of the repayment pause. 

First, review the budget to ensure that payments will fit back into monthly spending. Fidelity’s Student Debt Tool shows that borrowers pay an average of $515 per month against their loans, so borrowers will want to avoid any surprises when repayments resume. 

Second, confirm that the loan service provider has current personal and financial information, especially if automatic payments were used in the past. 

Third, review the financial plan to see how student debt fits into overall goals. Balancing student debt payments with saving and investing for the long term can be daunting, so it’s important to take the time to make sure the right repayment strategy is in place.