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A staggering 84 percent of American adults reported that student loans are hurting the amount they’re able to save for retirement, according to new research conducted by the MIT AgeLab and published by the Teachers Insurance and Annuity Association of America-College Retirement Equities Fund (TIAA). About three out of four borrowers said they’re putting off maximizing their retirement savings, instead focusing on paying off their student loan debt.
More than one quarter — 26 percent — said they aren’t saving for retirement at all because of student loan debt (the highest non-mortgage debt category in the U.S.).
“To be sure, getting a college degree remains one of the smartest investments a person can make in their financial future — but saving for retirement is equally important,” TIAA President Roger Ferguson Jr. said in a statement.
Borrowers, spanning all ages, said they were prioritizing paying off student loans, and will contribute to retirement savings once that’s completed. About 39 percent of those between the ages of 25 and 35 who aren’t saving for retirement cited student loans as the reason. And for the parents and grandparents taking out loans for children and grandchildren, 43 percent said they’ll focus on retirement once the debt is paid.
Concerns about student loan debt — and its effect on both individuals and the broader economy — has prompted a slew of Democratic candidates to introduce bills to either substantially reduce, or entirely eliminate, outstanding student loan debt ahead of the 2020 presidential election.
Massachusetts Sen. Elizabeth Warren rolled out a plan last month to cancel approximately $640 million in student loan debt for roughly 42 million Americans. The Student Loan Debt Relief Act, which she first unveiled in April, would eliminate up to $50,000 in student loan debt for every household with an income less than $100,000.
Warren’s plan came on the heels of legislation from 2020 rival Vermont Sen. Bernie Sanders, which went incrementally further in proposing to cancel all $1.6 trillion of student loan debt in the U.S.