Record student loan debt has multi-generational effects

January 8, 2015
3 min read

So, you’ve graduated… and maybe even found your first job. Now you’re tasked with the very real struggle of paying back those student loans that racked up while you were busy getting your education. The total amount of student loan debt in the US is a staggering — $1.2 trillion, higher than credit card and auto loan debt. According to Mintel’s recent Educational Lending — US, 2014 report, the sheer size of that debt may be enough to challenge US economic growth in the immediate future.

Mintel research finds that 47% of people aged 18+ have student loans. Some 16% have loans of $10K-$50k and another 11% have loans of $50K-$100K. This results in some 30% of people who have monthly loan payments greater than $300, while 5% have monthly payments greater than $1,000. Of those who have loans outstanding, 42% say it is a financial hardship to pay them back.

47% of people aged 18+ have student loans. Some 16% have loans of $10K-$50k and another 11% have loans of $50K-$100K

Record debt has multi-generational effects

High levels of debt affect not only the financial stability of young people immediately upon graduating, but have long-term effects as well. An August 2013 report from think tank Demos found that a two-income couple with bachelor’s degrees from a 4-year university has an average debt of $53,000. This translates to a wealth loss of nearly $208,000 over the course of a lifetime. Since much of this comes from their retirement savings, the debt is challenging the couple’s retirement stability as well as their immediate financial life.

Additionally, young people aren’t the only ones bearing the brunt of the student debt crisis; their parents and grandparents are paying for it too. According to the Federal Reserve Bank of New York, almost 17% of outstanding student loan debt is held by people over age 50. The average loan balance for those aged 50-59 is $23,183, while that of people aged 60-69 is $19,225. In addition, a 2014 report from the GAO (Government Accounting Office) found that the outstanding federal student loan balances of people aged 65+ grew from $2.8 billion in 2005 to $18.2 billion in 2013. The challenge for parents and grandparents is not only paying off balances of loans they took themselves, but also those they co-signed for their children and grandchildren.

Financial advisers have an opportunity to step in and help families plan their college saving strategies early in a child’s life, so paying for college can be more easily managed.

Robyn Kaiserman does research and analysis and writes in-depth reports for use by clients in and associated with the financial services industry. Her most recent topics include Innovations in Banking and Payments.

Robyn Kaiserman
Robyn Kaiserman

Robyn Kaiserman is a Senior Analyst, Financial Services at Mintel, researching and writing in-depth reports on the financial services industry.

More from Mintel
  • Mintel Store
    Mintel Store
    Get smart fast with our exclusive market research reports, delivering the latest data, innovation, trends and strategic recommendations....
    View reports
  • Mintel Leap
    Mintel Leap is a revolutionary new AI-powered platform that will transform your research process....
    Book a demo
Subscribe to Mintel Spotlight
Related articles
March 5, 2024
Retail
Article
The UK homeware market has shown remarkable resilience and adaptability in recent years, having faced the extended hiatus of the COVID-19 outbreak and a cost of living crisis which squeezed…
September 6, 2023
Household
Article
For many of us, the experience of welcoming a pet into our lives is an incredibly happy one. As well as the instant boost to your mood from having a…
April 10, 2023
Household
Article
At the onset of the pandemic, household surface cleaners became integral to consumers’ survival strategy as these products claimed to kill or remove the COVID-19 virus. However, with consumers now…

Download the Latest Market Intelligence