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Middle-class Gen Xers are facing a new retirement challenge: their student loans

Juliana Kaplan,Ayelet Sheffey   

Middle-class Gen Xers are facing a new retirement challenge: their student loans
  • A new report has found older Americans' student-loan debt is threatening their retirement plans.
  • Millions of older Americans are struggling with student loans, impacting their retirement.

Some older student-loan borrowers have been paying off their debt for decades — and it could eat into their retirement plans.

A new report from the New School's Schwartz Center for Economic Policy Analysis looks at how student-loan debt is weighing down workers who are gearing up for retirement and how that debt has diminishing returns for any would-be retirees.

Using data from the Federal Reserve Board's 2022 Survey of Consumer Finance, the analysis found that more than a million Americans ages 55 to 64 were holding student loans or had spouses with loans. Gen Xers and boomers are also set to be saddled with that debt for years to come.

And the burden of that debt appears to fall disproportionately on the lowest earners. Looking at debtors over the age of 55, the Schwartz Center calculated that just 3.7% were in the top 10% of earners, or those making more than $192,000. Conversely, it found 50.3% were in the bottom half of earners, making below $54,600, and 46% were in between, making $54,600 to $192,000.

The analysis found that Gen Xers and younger boomers still expected their student debt to loom well into retirement age; on average, respondents to the Fed's survey ages 55 to 64 said they expected it'd take 11 years to repay their loans, meaning many would be saddled with that debt well into retirement.

Many older Americans already find themselves living off of less than $30,000 a year, with many reliant on Social Security to stay afloat — or some just unable to retire altogether.

There are a range of reasons older borrowers may be struggling to pay off their student loans. A key reason is interest capitalization: If a borrower finds they cannot make their monthly payments at any point in their repayment period, they're forced to enter deferment or forbearance. During those times, the borrower isn't required to make a monthly payment, but interest still accrues on their principal balance, meaning that oftentimes, the balance can surge beyond the original amount borrowed.

And should a borrower find they cannot pay their loans in retirement, the consequences could be severe. Retirees are at risk of having up to 15% of their Social Security benefits garnished to repay their loans — something that a group of Democratic lawmakers have called to put an end to.

Of course, younger borrowers are also facing challenges paying off their student debt. Millennials are most likely to hold student debt with an average balance of about $35,000, and TransUnion found that while fewer Gen Xers had student debt, their average balance was higher at about $48,000.

Provisions are being rolled out by President Joe Biden's Education Department that could ease the burden of student debt on older borrowers. For example, the SAVE income-driven repayment plan shortens the timeline for debt relief — borrowers who originally took out $12,000 or less in student loans could receive debt cancellation after as few as 10 years of qualifying payments.

The department also extended the deadline for borrowers to benefit from one-time account adjustments, which allows borrowers on Public Service Loan Forgiveness and income-driven repayment plans an extra shot to get closer to relief.

On top of that, the Education Department is working to implement a broader student-loan forgiveness plan after the Supreme Court struck the first one down. It would cancel up to $20,000 in unpaid interest for borrowers, along with providing debt relief to those who have made at least 20 years of payments without any forgiveness.

Are you a Gen Xer with student debt who's worried about retirement? Share your story with these reporters at and

Correction: May 30, 2024 — An earlier version of this story misstated the percentage of debtors over 55 whom the Schwartz Center for Economic Policy Analysis found to be in the bottom half of earners. It was 50.3%, not 56%.

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