Skip to main content

Will the Explosion of Student Debt Widen the Retirement Security Gap?

Student loan debt was $1.2 trillion in 2015, compared to just $0.2 trillion in 2003. It now accounts for more than 30 percent of total household non-mortgage debt, having surpassed credit card debt in 2011. The average student debt level for recent college students in 2013 was $31,000.1 The question is whether starting out $31,000 in the hole could have a big impact on households’ retirement preparedness.

08. februar 2016

The brief’s key findings are:

In 2013, 55 percent of households in their twenties had student debt, with an average amount of $31,000.

The question is whether student debt – by reducing 401(k) savings and delaying home purchases – could have a big impact on retirement preparedness.

The analysis uses the National Retirement Risk Index (NRRI), which measures the percentage of working-age households “at risk” of falling short in retirement.

If NRRI households had started out with today’s student debt levels, the Index would be 56.2 percent instead of the already alarming 51.6 percent.

The bottom line is that college costs should be included in broader policy discussions over how to improve financial security.