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Student loans can make it more difficult to prepare for retirement, and that’s reflected in older borrowers’ retirement balances, according to data from Fidelity.
Employees age 50 and older who currently have student loans have an average retirement balance of $153,000, while savers in the same age group without such loans have a retirement balance about 30% lower at $221,000, the financial services firm said in a report released Wednesday.
Workers ages 18 to 49 with student loans have about 20% smaller nest eggs than workers without debt, with an average balance of $58,000 compared to $72,000. Fidelity analyzed internal retirement account data that includes borrowers enrolled in student loan benefit programs.
“Student loans cast a long shadow,” said Jesse Moore, head of student loans at Fidelity. “It doesn’t fade with age or advancement in career. It’s a structural issue that shapes financial security at every stage of life.”
Experts say the findings highlight some of the burdens of student loans, which tend to cause borrowers to delay investing for retirement or make smaller contributions than they should have. So you have less time and money to grow your savings. Even later in their careers, student loan holders are not catching up.
Roughly 9.5 million Americans over the age of 50 have education debt, with an average balance of about $47,000, according to an analysis by higher education expert Mark Kantrowitz.
“Every dollar people spend on debt repayments leaves them with one less dollar to save for retirement,” Kantrowitz said.
Another Fidelity poll found that leaving your job with student debt can have ripple effects. One-third of baby boomers surveyed said they had put off traveling because of student loans, 16% said they had put off buying a home, and 8% said they had put off starting a business. In October, the company surveyed 747 U.S. adults who were currently repaying student loans.
Borrowers may be set back if the repayment period becomes longer
Consumer advocates say recent changes to the law through President Donald Trump’s “Big and Beautiful Bill” may only make problems worse for older student loan borrowers.
Student loan repayment plans now typically range from 10 to 25 years, resulting in more people already carrying education debt into middle age and beyond. But starting in July, borrowers could face repayment terms of up to 30 years.
“This approach will perpetuate the cycle of debt,” said Carolina Rodriguez, director of New York’s Education Debt Consumer Assistance Program. “Borrowers struggling with their own debt are unable to save for retirement or their children’s education, which inevitably leads to more borrowing.”
