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College Debt Could Delay Retirement for Young Grads


Saving for retirement is probably the last thing debt-burdened college grads want to think about, but unfortunately they may have to start sooner than they think. According to a new study, many Millennials may not be able to retire comfortably until age 73 due to their college debt. Essentially, the problem is that while students are paying off their debt in their 20s and 30s, they will have little, if anything, left to contribute to a retirement fund. When young people wait to save money, their investments have less time to appreciate, which adds up to a significant sum over the years. The WSJ’s Market Watch reports:

Here’s the problem, according to NerdWallet: The median debt for a student when she graduates is $23,300, and the median starting salary for a recent grad (who has a job) is $45,327. Assuming a student makes the average annual loan payment of $2,858 for the first 10 years of her career, that drastically cuts into the amount of retirement saving she can manage. And figuring that missed-out contributions could have been earning a compounded rate of return until retirement, the lost savings due to student debt payments is $115,096 by age 73, according to the report. The report assumes every loan payment would have gone to retirement savings, and that the graduate would save at the historical 30-year national post-tax savings rate of 6.1% after the debt is paid off, Egoian said.

This doesn’t mean that it’s impossible for college grads to start saving early. The study notes that graduates with below-average debt and above-average salaries will likely be able to retire at the standard age, 65. And many struggling but resourceful grads find ways to live frugally and save more. Nonetheless, this does suggest that college debt continues to be a burden on the younger generation that may haunt them for the better part of their lives.

[Ball and chain image courtesy of Shutterstock]

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  • Anthony

    In real numbers, what actual percentage of U.S. population of college age is being discussed (also, “the report assumes every loan payment would have gone to retirement savings)…

  • Pete

    This is part of the Leftist agenda to crush the American middle class.

    • Corlyss

      I guess we should be grateful Obama and his ilk aren’t killing us like Stalin did to their middle class in the 30s.

  • Corlyss

    I’ve a friend approaching his retirement who has gone to school all of his life. He’s got a BA, a Masters in International Relations, an MBA, a JD, one or two advanced degrees in information systems management, and a CPA. He can’t afford to stop going to school because all of his student debts will come due at that point. Frankly, I’ve been surprised anyone would hire him because that kind of resume screams overqualified and chronically dissatisfied.

    • Andrew Allison

      Corlyss, might I respectfully suggest another scenario: your friend has gone through life going to school on OPM, and hasn’t managed to become a productive member of society. More directly, doesn’t there come a point where welfare should be earned.

      • Corlyss

        I take your point, but he’s not now nor has ever been on welfare. He’s worked for the government as an Army officer, an attorney, an AF officer, then a DoD civilian overseas in Korea and Germany, in local government, private hospital administration, and now he’s at DHS.

        • MrJest

          He worked FOR THE GOVERNMENT. That is being an unproductive, and in fact consumptive, member of society. He WAS on “welfare” doing those “jobs”. He was a parasite, all those years. Still is. Those are NOT “jobs”, because they do not PRODUCE new goods for new wealth.

          • Corlyss

            You’re wrong, about most federal civil servants, and him especially.

          • MrJest

            Considering 95% of the Federal Government is not only completely unnecessary, but totally unconstitutional, I think not. The DHS, for example, is an abhorrent abomination that should never have happened.

            And the tyranny marches on, to the inevitable, bloody conclusion… and morons like you empower it, God help you.

  • Boritz

    The model for 99+% of human history:
    1. You are born
    2. You are a kid
    3. You go to work
    4. Death

  • RichPowers

    And once we add in Obamacare so that, in addition to the college debt burden, grads are forced to buy expensive health care plans…..

    To all you college kids who voted for Obama….hope you are happy. He fooled you not one, but twice! Oh well, you may not be able to afford a decent meal or retire….but you got them free condoms…

  • Nick Bidler

    “Could?” I fully expect to work until I die, for the benefit of my parents, just as they did for my grandparents, just as they did for the first recipients, who didn’t pay one red cent.

    • MrJest

      Precisely… when I see articles like this, I say to myself, “What is this ‘retirement’ of which you speak??” I knew since I was 12 or so (I’m almost 50 now) that I’d have to work until the day I died.

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