PROVIDENCE – From 20-somethings to those at the end of their careers, student debt is a problem across generations that also spells trouble for retirement, according to a new report by Fidelity Investments Inc.
The Oct. 13 report, based on analysis of Fidelity customers with student loans, shows that no generation has been spared, with Generation Z joining the ranks of older generations facing loan debt. However, baby boomers continue to face the biggest burden in terms of average monthly payments, total balances and interest rates. The average balance among baby boomers was over $58,000, more than twice the $27,900 average balance among Generation Z. Those debts can also spell problems for retirement, stopping loan holders from saving for retirement or even forcing them to take out money from their savings plans.
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Again, this problem is most prevalent among the older generations, with 30% of baby boomers who have student loan debt also having a 401(k) loan, when the account holder borrows money from the account and pays it back over time with interest. By contrast, just 2% of the Gen Zers who have student loans also have a 401(k) loan.
As part of its report, Fidelity also announced expanded support for student loan repayment for its workers. Beginning in December, the company will offer up to $15,000 in lifetime repayment for its associates, which is expected to pay down their debt by up to 50%, according to a news release. About 5,000 existing employees will be eligible.
The data reflects results of more than 60,000 users of Fidelity’s Student Debt Tool with over 210,000 loans as of Sept. 30.
Nancy Lavin is a PBN staff writer. You may reach her at Lavin@PBN.com.
