Student loan debt isn’t just making it harder for millennials to own a home. According to data from Ameritech Financial, it’s also impacting the Boomer generation.
New analysis from Ameritech, based on data from the New York Federal Reserve, shows that student loan debt has increased eight times for people aged 60 or older—all between 2005 and 2015 alone. Student debt increased five times for people between 50 and 59 and two times for those under the age of 30.
According to Tom Knickerbocker, EVP of Ameritech Financial, these rising debts aren’t just making it harder for Baby Boomers to own a home; they’re also making it more difficult to save for retirement—a milestone just around the corner for many.
"It's alarming to see the amount of people preparing for retirement who have student loan debt increase like that," Knickerbocker said. "Student loan repayment can be burdensome for anyone, but potentially more so for those in their 50s or 60s who are facing retirement and the financial challenges that can come from that."
While some Boomers acquire this increased debt by taking out loans to return to school, many also secure loans in their children’s or grandchildren’s stead to help them pay for college.
“Parents helping their kids through college by taking on student loan debt are in uniquely vulnerable positions,” Ameritech reported. “Not only do they not see a return on the investment, but the potentially outrageous monthly payments can prevent them from staying afloat, especially when something bad happens.”
Some parents even refinance their homes to assist their kids with college costs.
“It's hard to tell how much parents are borrowing in these cases,” Ameritech reported. “Many choose to mortgage their home instead of taking out student loans—a move that is smart but hard to track. Whether the debt is in the form of student loans or another mortgage, it is bad for retirement savings. Any money going into education costs is money taken away from retirement.”
Boomers aged 60 to 64 are also more likely to be in default on those student loans. According to Ameritech, 12.6 percent in this age range are in default—a default rate higher than that of all borrowers under 40.
“We've seen lots of reports come out about student loan debt influencing other financial decisions, whether that's buying a home, starting a family or now retiring,” Knickerbocker said.