With federal student loan payments set to resume starting next week, there is widespread speculation that making those payments for the first time in more than 3 years will have a profound negative impact on those borrowers’ ability to keep saving for retirement.
A new study out this morning further confirms those fears.
Three out of four (75%) borrowers surveyed said that resuming student debt payments will impact their ability to save for retirement, according to new insight released by Corebridge Financial and Morning Consult. The poll also showed that in order to make these payments beginning in October of this year, more than one in five borrowers expect to reduce savings overall (29%), for emergencies (29%) and retirement (22%).
This comes on the heels of an Achieve survey earlier this month finding that 30% say they will delay saving for retirement, and an August Empower study finding 42% of Americans say they will consider curtailing retirement savings when student loan payments resume.
“Many Americans are likely to feel increased pressure on their personal budgets once student loan payments resume”
Corebridge Financial’s Terri Fiedler
“Many Americans are likely to feel increased pressure on their personal budgets once student loan payments resume,” said Terri Fiedler, President of Retirement Services at Houston-based Corebridge Financial. “Even with the new financial stress, borrowers can still take action to save for retirement and a financial professional can help. Whether it’s evaluating your monthly expenses to streamline charges or exploring student loan forgiveness, every dollar matters when it comes to saving for the retirement you want.”
The new Corebridge survey also shows how student loan debt could impact the financial security of women with 60% saying they do not expect to be able to afford making payments in October compared to 39% of student loan borrowers who are men. Women (5%) were also three times less likely compared to men (16%) to have put their disposable income from paused payments toward retirement, only compounding the situation.
Additionally, while four in five borrowers expect higher overall stress, financial stress and impacts on financial security, borrowers earning less than $50,000 expect the most challenging road ahead:
- 77% say that payments will affect retirement savings
- 67% say they will probably or definitely not be able to afford to make payments toward student loans
- 53% expect to miss one or more payments and 38% expect to default on the loan
The poll was conducted between August 16-24, 2023 among a national sample of 2,112 adults with federal student loans.
SEE ALSO:
• Borrowers Increasingly Stressed Over Looming Student Loan Payments
• Biden Formally Unveils SAVE Plan to Combat Student Loan Debt
• 401(k) Contribution Cutbacks Likely When Student Loan Payment Pause Ends