stop blaming colleges for ruining retirement.
be sure, student loan debt topped $1.5 trillion in the
first quarter, according to the Federal Reserve. Thatís
a huge number.
also true that more 60-plus people are carrying
education debt, either for themselves, children or
grandchildren, though thatís a little misleading
because due to the baby boom effect, there are simply
more 60-plus people doing just about everything today.
student loan debt now stands at about $39,000, which is
more than $10,000 lower than average starting salaries,
according to Mark Kantrowitz, a longtime student loan
expert who recently founded privatestudentloans.guru, an
independent website on paying for college that accepts
no lender advertising.
students keep loans below their starting salaries ó or
if parents keep borrowing below their current salaries
for all their children ó they should be able to pay
them off in a decade, Kantrowitz said.
loans have acquired a panic reaction and been blamed for
a cascading effect on the economy that they really werenít
responsible for," Kantrowitz said, nodding to some
data showing that college debt can delay home purchases.
if the debt is manageable, however, experts say
education debt often psychologically crowds out
retirement saving. No matter how little someone owes on
student loans, borrowers donít start saving for
retirement or other goals like housing until itís
gone, some studies have shown.
the barriers are real or perceived, a handful of
financial services firms are beginning to offer college
savings content on their 401k websites, including tools
to help manage student loans and refinance education
debt. Recently, Fidelity Investments said 25 large
employers have enrolled nearly 9,000 workers in its
Student Debt Employer Contribution benefit. It also
added a Credible.com platform that lets employees shop
for loan refinance providers.
savings companies are starting to think about oneís
total financial life, and these loans are particularly
important factors for millennials," said Stephen
Dash, Credibleís founder.
of that is great and there are certainly many families
who are severely strapped by education debt.
really, all sorts of discretionary spending ó from
lattes to luxury cars ó can derail retirement. And
with education debt, at least there is a chance that the
knowledge will lead to a job or a higher salary that
actually will impact retirement in the long run.
trick is keeping overall costs down by selecting a
program that wonít cost vastly more than an eventual
salary will cover, and then paying off whatever loans
are taken as aggressively as possible.
the messy business of life, not everyone gets both of
those right, but there are ways to recover.
years ago, Jared Schulman graduated with a bachelor of
arts degree in comparative cultures and politics, and
$106,000 in student loan debt.
a short time, he unloaded trucks at a warehouse. Then he
leapt at an entry-level position in the fundraising
department of his alma mater, Michigan State University.
He dug into database work there, setting himself up for
landing his current job in data analytics and strategy
for the athletic department at University of Texas in
Austin in 2016. It comes with a pension plan and a solid
future career path, he said.
get there, he drove his Honda CRV with 200,000 miles on
it and rented space in a friendís dining room in the
early months. He still shares an apartment with friends
to save on housing costs and has refinanced his student
loans, foregoing income-based repayment in order to pay
it off sooner at a lower interest rate.
has already cut his debt to $51,000, and plans to pay
off the rest in roughly four years, before age 31.
enjoyed my job at MSU a lot and could have stayed in
Lansing the rest of my life," he said. But the
long-term career ladder was better with the move, and
the debt helped him focus.
part of the push of debt," he said. "I knew I
couldnít stay where I was comfortable."
great lesson for anyone, young or not so young, with
goals for the future.