
Five Tips for Gen Xers Facing Student Debt Challenges
By Chris Taylor
NEW YORK (Reuters) – Generation X is often labeled the "Forgotten Generation," overshadowed by larger cohorts like Baby Boomers and Millennials. However, one thing that hasn’t been overlooked is their student debt.
Take the case of Debbie Irk, a rehab counselor from South Bend, Indiana. She obtained an associate degree in criminal justice from the University of Phoenix, aspiring to pursue a career in law enforcement. To achieve this, she borrowed approximately $50,000, which has now ballooned to $77,000. Irk aimed to manage monthly payments of $652—nearly equivalent to her rent—but found it difficult to keep pace financially.
As the pandemic pause on student loan repayments comes to an end, she’s uncertain about how to manage her expenses. "I’m sitting on a pile of debt, and it just keeps growing," says Irk, 46, who also cares for a disabled husband. "I’m really at a loss as to what to do."
Irk’s struggles are shared by many in her generation. A recent report by the National Institute on Retirement Security (NIRS) reveals that 13% of working Gen Xers are still facing student debt, with the average amount being $40,000. This is particularly concerning as many Gen Xers are now in their 50s, with retirement approaching. They often juggle various financial responsibilities typical of the "Sandwich Generation": managing student debt, saving for retirement, raising children, and caring for elderly parents.
These competing demands often force Gen Xers to forgo retirement savings. "There are clearly some tradeoffs happening here," says Tyler Bond, research director for NIRS. "For those in Gen X with student debt, the average amount of retirement savings is consistently lower, and they are not meeting their savings targets."
While President Biden’s proposals aimed at student loan forgiveness could have benefited individuals like Irk, these plans were halted by the Supreme Court, leaving the future of such initiatives uncertain. With retirement on the horizon, time is running out for many as they continue to shoulder this debt.
"These student loan repayments can last for 30 years," notes Evan Potash, a wealth management advisor. "I have clients who are still paying them well into their 50s."
Here are some tips for Gen Xers feeling the pressure of student debt:
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Stay Informed About Recent Federal Changes: The new federal legislation includes provisions that could help. Starting in 2024, eligible employers can match your student loan repayments with contributions to your 401(k).
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Explore Public Service Loan Forgiveness: If you’re employed by a government or nonprofit organization, you might qualify for this program, which may eliminate remaining federal student debt after 10 years of payments.
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Utilize the "On Ramp" Option: If resuming federal student loan repayments is difficult, an "on-ramp" option is available until September 30, 2024. Borrowers can avoid severe repercussions for late or missed payments, allowing for a more manageable transition.
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Start Where You Are: For mid-career professionals struggling to save for retirement, it’s crucial to remember that there’s still plenty of time ahead. "Younger Gen Xers are likely to work for another 20 years," Bond explains. "You still have time."
- Be Strategic in Your Approach: With multiple financial obligations, prioritize which debts to pay off first, advises Potash. Make minimum payments on all debts while also making additional principal payments on high-interest debts, such as credit cards.
Even in seemingly insurmountable situations, hope remains. Potash himself once faced a daunting $240,000 in student loans, but he recently made his final payment. "It was the best feeling I’ve ever had in my entire life," he shares.