The Impact of Student Debt on Retirement Savings

According to, as of November 21, 2016, the U.S. national debt was approximately $19,865,000,000,000 and rising every second. In many ways debt has become commonplace for our country and citizens. The most recent data from the Federal Reserve Bank of New York states that as of June 30, 2016, the aggregate household debt balance is $12.29 trillion.  

As debt seeps deeper into our lives, it becomes an accepted necessary evil to advance in many ways. If we want to buy a home, we take out a mortgage. If we want to go to school, we take out student loans with the hopes of obtaining a better paying job with an upward trajectory. With that being said, our article will focus on the student debt crisis so many Americans currently face as we analyze the statistics and what that means for their ability to save long-term for retirement. (For related reading, see: How to Create a Plan to Deal With College Debt.)

Student Debt Statistics

Statistics compiled from Student Loan Hero provide an overview of the current breakdown of U.S. student loan debt. The most recent reports indicate there is:

  • $1.26 trillion in total U.S. student loan debt
  • 43.3 million Americans with student loan debt
  • Student loan delinquency rate of 11.6%
  • $37,112 was the average student loan debt for the class of 2016
  • Average monthly student loan payment (for borrower aged 20 to 30 years): $351
  • Median monthly student loan payment (for borrower aged 20 to 30 years): $203
  • $61,223 is the average amount of student loan debt, according to Student Loan Genius.
  • $638 is the average monthly payment.

Student Loan Debt’s Effect on Retirement Savings

According to a Fortune article from May 2016, about one-third or 34% of Americans saddled with student debt are not saving anything for their retirement. And there are some additional statistics that show just how serious the student loan burden has become:

  • Nearly one in three Americans (32%) have spent money earmarked for retirement on student loans.
  • 57% of Americans with student loan debt plan on spending money on student loans that they were going to use for retirement.
  • More than half of Millennials are concerned about money and 53% are carrying credit card debt.

Key Takeaways

Working Americans that currently have student loan debt have a challenging road ahead of them in the present and the future. The inability to be able to save for retirement will affect many American’s futures and when, or even if they will be able to retire. It will also have an impact on businesses as employees will need to work longer, leading to higher healthcare costs and salaries for tenured employees. (For more, see: Student Loan Debt: What Every Borrower Should Know.)

Since this has become such a major issue for so many Americans, some employers are now implementing different types of retirement savings programs to help employees tackle student debt. For example, the employee can make payments to their student debt and the employer could give a contribution to the employee’s retirement plan. Employees can ask their employers if this type of program is available at their company. At the very least, workers who are dealing with student debt should be aware of how that burden may be impacting their retirement savings. (For more, see: 5 Things to Know if Your Adult Child Lives at Home.)


Securities offered through LPL Financial. Member FINRA/SIPC. Investment advice offered through Summit Group Retirement Planners, Inc., a Registered Investment Advisor. Summit Group Retirement Planners and The Summit Group Associates are separate entities from LPL Financial. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.