New data released from The Center for Retirement Research at Boston College revealed that student loan debt is preventing Americans from saving for retirement. Student loan debt has reached massive levels, with 40 million people stuck with at least one student loan. It accounts for more than 30 percent of non-mortgage related household debt. According to the St. Louis Federal Reserve, more than 27 percent of student loan borrowers in repayment are delinquent on those payments.
The report found that student loan debt has the same impact on retirement savings as unexpected healthcare costs. This means that a greater percentage of households are at risk of not being able to maintain their standard of living in retirement, because they are unable to save while they are in the workforce.
Most college bound students are not thinking about retirement when they take out student loans for expensive degrees. Unfortunately, if students choose a degree that will prepare them for a low-earning career or a career with a deficit in jobs, student loans are going to be harder to pay back.
Student loan debt is not only affecting retirement, it’s also affecting borrowers abilities to purchase homes and buy new cars. Many borrowers are unable to obtain a mortgage because their student loans push their debt-to-income ratio disqualifies them.
The Center for Retirement Research used the National Retirement Risk Index, which measures the percentage of working households age 30 to 60 who are on track to be able to maintain their standard of living in retirement. It looks at what a person’s age 60’s retirement security would be if the person had the same level of student loan debt as today’s average, $31,000.
The Center found that the percentage of people at risk went from 51.6 percent to 56.2 percent, a 4.6 percent increase. Although it doesn’t seem like a great increase, a 19.6 percent across-the-board cut in Social Security benefits would raise the index by 10.7 percentage points. This means that the impact is roughly half of the impact of an unprecedented move such as cutting Social Security benefits.
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For borrowers who are struggling with student loan debt, relief options are available. Many student loan borrowers are unaware that they have rights and repayment options available to them, such as postponement of loan payments, reduction of payments or even a complete discharge of the debt. It is important you contact an experienced Miami bankruptcy attorney who can advise you of all your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade & Garcia, P.A. has been helping people from all walks of life build a better tomorrow. Our attorneys help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade & Garcia website at www.miamibankruptcy.com.