PLANADVISER - September/October 2017 - 68

beyond(k)
Laden With Student Debt
A
t year-end 2016, Americans
held a record $1.3 trillion in
outstanding federal student
loans, according to a report from
the Federal Reserve Bank of New
York. These loans now represent the
biggest chunk of consumer debt in
the country outside of mortgages,
and they carry the highest delinquency
rate.
Additionally, it seems that the
skyrocketing cost of higher learning
impacts anyone needing a loan to
afford it-no matter what their age.
Student loan payments now
prevent 62% of Millennials from
saving for retirement and making
other investments, according to a
recent survey by American Student
Assistance (ASA). The study also
found that 48% in this group have
no emergency savings, and 35%
have difficulty paying for daily
necessities because of their loans.
But Millennials are not the
only ones struggling. The Federal
Reserve Bank study also found that
17% of outstanding student loan
debt is owed by borrowers over
age 50. And a recent report from
the Consumer Financial Protection
Bureau (CFPB) reveals that 40%
of borrowers 65 and older are in
default-the highest rate for any age group.
A major contributor to this rising debt among elders is
their taking or co-signing loans toward their adult children's
or grandchildren's education. According to a Government
Accountability Office (GAO) report, approximately 706,000
households headed by someone 65 or older carry student
loan debt.
Even if older borrowers took the loan for themselves,
the outcome is the same. ASA notes, " A growing number
of those early student loan borrowers are now heading for
retirement and have found their financial situation precarious
at best due to their outstanding student loans. "
Many workers, therefore, are turning to their employers
for help, and companies are paying attention. This debtrelated
stress affects their bottom line in the form of
increased absenteeism, decreased productivity and disengagement.
New
programs can lessen workers' load-and boost their financial wellness
As a result, many providers are creating programs that
address both needs, helping employers boost their workers'
financial wellness by contributing toward their student
loans or making a match toward their 401(k), whichever
best suits the individual's payment method.
One key aspect of such programs is raising awareness
about the different repayment avenues open to borrowers
and then motivating them to act on what they have learned.
Snezana Zlatar, senior vice president, full service solutions
product and financial wellness, at Prudential Retirement
in Newark, New Jersey, says her firm has seen some
success with its student loan management adviser platform.
This is designed to be an interactive, one-stop resource
where users can explore in plain language the terms and
conditions of their loans, including any potential opportunities
for loan forgiveness, debt consolidation, cheaper repayment
programs or other refinancing options. " It's about
68 | planadviser.com september-october 2017
Art by Alex Eben Meyer
http://www.planadviser.com
PLANADVISER - September/October 2017

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