Baby boomers are the most heavily burdened generation when it comes to average monthly student loan payments, total balances and interest rates, says Fidelity Investments.
In a recent press release, Fidelity said data from its student debt tool shows boomers have the most student-loan debt. “This is likely due to a combination of factors, including career changes that require additional education, as well as loans taken out to finance a child or grandchild’s education, which often carry higher interest rates,” Fidelity said.
Fidelity said its data is derived from over 60,000 people who used the debt tool as of September 30, 2021. The users had more than 210,000 loans and work at 6,000 companies.
The data also showed Generation Z, the oldest of whom have recently graduated from college, are now among workers with student loans.
According to Fidelity, boomers have an average student loan balance of $58,300, compared with $51,400 for Generation X, $46,400 for millennials and $27,900 for Gen-Z. A greater percentage of older generations with student loan debt are also likely to have 401(k) loans: 30% of those boomers, 32% of Gen X, 14% of millennials and 2% of Gen-Z.
Repayments Restarting
Because of the COVID-19 pandemic, the federal government suspended repayment of federal student loans, instituted a 0% interest rate and stopped collection on defaulted loans. However, that relief ends on January 31, 2022, when loan payments will begin again.
Fidelity noted 40 million Americans with federal student loans will need to begin repayment and interest accrual. As a result, Fidelity announced it was expanding its student loan assistance program to its own associates.“We expect more than 5,000 Fidelity associates may benefit from this competitive program, which includes a waived waiting period to become eligible so new hires can enroll on day one, and a $15,000 lifetime maximum payment,” Tom Vogel, head of financial benefits for Fidelity Investments, said in the release.
Fidelity offers two programs for employers who want to help workers with student loan debt. Student Debt: Direct, allows employers to make direct payments toward an employee’s student loan. Student Debt: Retirement triggers a retirement fund contribution by the employer when an employee makes a student loan payment.
Fidelity works with 13,500 wealth management firms.