Student loan debt benefits retirement plans of 39% of borrowers
- TIAA, a financial services company, released a survey examining the impact of student debt on public servants.
- He found that student debt hurts retirement savings for 39% of these borrowers.
- Public sector workers might qualify for a loan forgiveness, but the program has a high denial rate.
The student debt crisis continues to grow, and workers in public sectors, like education and nonprofits, are struggling to drastically cut their loans each year. And it hurts their retirement plans.
On Tuesday, TIAA – a financial services organization – released the results of a investigation with 810 Americans currently working in the public service industries. He found that more than one in four borrowers, or 27%, said they reduced the amount of money they saved for retirement because of their student loans, and one in eight borrowers, or 12% , hadn’t even started saving for retirement. for the same reasons.
And while the pandemic pause on student loan payments has brought relief to borrowers, 57% of borrowers surveyed still have $ 50,000 or more in student debt while 24% of them have more than $ 100,000 in debt. , and once the recess is lifted on February 1, almost all civil servants expect to experience at least “some difficulty” in repaying their loans.
In view of the high level of public service debt, the Public Service Loan Forgiveness Program (PSLF) was established in 2007 to provide these borrowers with student debt relief after ten years of qualifying payments. But since the first group of borrowers became eligible for the remission in 2017, the program has increased a 98% denial rate, leaving the vast majority of those borrowers burdened with debts they thought were written off.
This is why the Department of Education announced last month an overhaul of the PSLF which put in place a time-limited waiver until October 31, 2022, to allow borrowers to count payments from any federal loan program. or repayment plan for loan cancellation through PSLF, including programs and plans. that were not previously eligible.
Like NPR recently reported, however, FedLoan Servicing, which manages the PSLF, ignored the new rules for at least three weeks after the department’s announcement, leaving borrowers excited to move closer to relief disappointed.
Even beyond the debt burden on civil servants, borrowers across the country have told Insider they don’t see a retirement in sight. Linda Navarro, 70, borrowed $ 20,000 in 1990 for her graduate studies, and she now owes $ 145,000 and has an estimated return on investment of $ 212,544. She previously told Insider that “there is a real fear of dying in there.”
âWhen student loans took over my life, I stopped waiting for anything,â she said. “You’re on a hamster wheel, and you won’t get off. You know you never get off.”
And Reid Clark, a 57-year-old man with $ 550,000 in student loans for the education of his five children, previously told Insider his retirement prospects were bleak.
âI’m looking to pay $ 3,000 a month for the better part of the rest of my life,â Clark said. He believes he will have to continue making these payments for at least three decades.
Lawmakers are stepping up calls for President Joe Biden to write off student debt, but with the Education Department preparing for a resumption of payments next year, general relief is unlikely to come from if early.
Do you have a story to share on student debt? Contact Ayelet Sheffey at [email protected]