Student loan debt is keeping millennials and baby boomers from reaching financial goals, a new study shows. According to the Guardian’s 6th Annual Workplace Benefits Study, seven in 10 working U.S. adults with college debt find their finances to be a major source of stress.
In their study, Guardian Life Insurance analyzed college debt’s impact on workforce well-being and the growing interest in college education benefits in light of the nation’s total student loan debt of $1.5 trillion.
Researchers found that few working Americans feel they’re making progress in paying off their loan debt. Few also feel they’ve made progress saving for their children’s college education in the last two years.
As a result, seven in 10 parents say they plan to use some of their investments and retirement savings to pay for their children’s college education.
College tuition costs have soared over the last few decades, rising faster than wages and inflation. But it isn’t just millennials who are being buried alive under student loan debt. Baby boomer college debt has also been growing.
Parent PLUS loans aren’t anything new, but a growing number of baby boomer parents have over-extended themselves to help fund their children’s college education.
Over 50% of baby boomers say that college debt has negatively impacted their ability to meet their own financial goals such as maintaining their retirement lifestyle.
In September 2018, the Department of Education reported that 1.8 million borrowed age 62 and older owed $62.5 billion in federal student loan debt. Those between age 50 and 61 owed $213.6 billion.
With these numbers in mind, it makes sense why so many industries have been struggling to target millennials who can’t afford to splurge.
Many millennials can’t afford down payments on houses and have been living in apartments for longer. If millennials do manage to secure a house, they don’t tend to have to money to invest in a remodel. DIY projects are in the rise, with younger consumers. Knowing that something as simple as cabinets being 40% to 50% of a kitchen remodel cost, younger homeowners on a budget choose to find alternate ways to spruce up the home. And apartment living has resulted in up to 35.1 million Americans move annually.
While some industries are floundering with their lack of business, others are using college debt as a way to improve employee engagement and productivity. According to the Guardian’s data, seven out of 10 employers say that improving their workers’ financial wellness is a key objective. That’s a 15% increase since 2015.
Several workplace trends have also taken to helping employees pay down college debt or save money. These trends include student loan repayment plans, college tuition rewards, debt management resources, and access to financial advisors.
These workplace benefits have a return on investment of their own for the employer, too. Up to 92% of workers say they would take advantage of an employer match for student loan repayments that are similar to a 401K plan.
Douglas Boneparth, president of Bone Fide Wealth, recommends creating short-term objectives and identifying your financial goals to build long-term financial security.
Everyone’s goals and how they get prioritized are different, Boneparth says, so it’s important that you look inward before doing much of anything. Once you identify your goals, you ought to quantify them and then prioritize them.
“I think this is often the most important step,” said Boneparth. “Most people do not have the financial resources to fund all of their goals at once.”