About 60 percent of families with student loans are paying for their children’s education while about 40 percent are paying for their own, said Craig Copeland, senior researcher at the Employee Benefit Research Institute.
Copeland spoke during the EBRI webinar “The Far-Reaching Implication of Student Loan Debt” on Wednesday.
Student loan debt has grown into a trillion-dollar nationwide problem that affects individuals and families, including white- and blue-collar workers. Researchers and analysts have been following what kind of ripples and waves student loan debt causes for people over the long run.
Using government data, Copeland presented figures demonstrating how older individuals are now a much bigger percentage of student loan holders. In 1992, nearly 60 percent of loan holders were 35 years old and younger and a quarter of holders were between 35-44. By 2016, 45- to 54-years-olds had become 19.5 percent of loan holders, compared with 8.9 percent in 1992, and 55- to 64-year-olds ballooned to 11.1 percent of loan holders, compared with 3.7 percent 24 years earlier.
In 2016, Copeland says, families were paying an average of about 5 percent, or $304 a month, of their income toward student loan debt. The median $200, amounting to 3 percent of a family’s income.
Copeland’s data also reflected the effect that student loans have on balances in defined contribution plans, such as 401(k)s. There was an approximate $20,000 difference between the average defined contribution balance of a college graduate with no student loans and a college graduate with student loans ($53,638 vs. $32,987).
The difference was smaller for people who did not complete college; those who had student loans had an average balance a little over $16,000 while those who were student-debt free had a balance a bit over $21,000.
Copeland reported that student loans impacted home ownership too. For people under age 35, 42 percent of college grads with student loans owned a home compared to 45 percent without student debt. For the under-35 group that dropped out of college, 26.5 percent with student debt owned homes vs. 27 percent without loans.
However, the difference in home ownership was more noticeable with older people. For college grads 45-54 years old, 75.7 percent who had college debt owned homes vs. 84.7 percent of those without loans. For college dropouts, only 47.7 percent with loans owned homes vs. 70.9 percent who did not have loans.
American workers have expressed interest in financial education products and services, especially those between the ages of 25 and 34 in 2018, according to Copeland. More than 50 percent want financial well-being programs that offer debt counseling and consolidation, help with basic budgeting and day-to-day finances and student loan debt assistance.