Gen X Woman Fears $70,000 in Student Loans Will Crush Her Retirement Dreams

As student debt reaches record highs in America, many borrowers see no end in sight. That is certainly the case for Kate, a 44-year-old woman in South Dakota who never anticipated her loans would haunt her 25 years later—and doesn’t even have a degree to show for it.

Kate left school for good in 2007, but nearly two decades later, she’s still paying off a $70,000 balance, she told Newsweek.

When Kate, who preferred to be known by an alias, started college in 1998, her parents were unable to help. So she took out student loans and borrowed the maximum amount.

“We were promised low interest rates and as an 18-year-old, I didn’t really understand what a variable interest rate was and that it could and would increase,” Kate said. “That’s half the problem, no adequate loan counseling before taking out these loans.”

She took brief departures from school to have her children in 2001 and 2006. Kate changed majors twice but was finally ready to finish school after.

“My advisor reassured me I still had adequate financial aid to finish school,” Kate said. “However, my naive self went with his word and I didn’t stop to actually calculate everything myself.”

After realizing she’d be forced to pay $6,000, which Kate did not have lying around, she left school entirely and now has no degree and more than $70,000 in debt.

“Now I have all these credits, $70,000 in debt, and nothing to show for it,” Kate said.

While Kate once dreamed of becoming a high school history or art teacher—dreams that have now faded away.

“I have an entry level job that I do love, but I have always wondered what my life would be like if I had been able to graduate,” Kate said.

In her late 20s, the amount owed was $45,000, and despite years of consistent payments, Kate said the income hikes and fluctuating interest became too much to bear.

“I was unable to afford my student loans with day to day life getting in the way,” Kate said. “They ended up in default and I became so embarrassed and depressed.”

Ten years later, Kate got her loans out of default, but they now stood at $60,000. Once the pandemic hit, Kate was nearly falling into default again despite a nationwide pause on student debt payments, and that number soared to $70,000.

Currently, Kate is waiting to hear back on her application to Biden’s SAVE program, which reduces many borrowers’ payments. The loan repayment plan specifically calculates monthly charges based on income and family size, discounting how much student debt is owed, making it much more affordable in the long run.

Still, Kate doesn’t have much hope regarding her financial situation and worries about how this could impact her in a few decades when it comes time to retire.

With interest, Kate thinks the loans might reach $100,000, destroying any chance of her being able to comfortably retire.

“This system is broken as I am,” Kate said. “I need help. I understand I do have this debt and need to pay it, but don’t see an end in sight with these crazy variable interest rates.”

Kate said she wants stronger loan counseling in America “before trapping people with this crippling debt.” She also wishes there was debt repayment with a smaller interest rate.

“I don’t see any relief in sight,” Kate said. “I worry non-stop about these as I see retirement age in 20 years. That’s not too long away.”

Debt’s Hit on Retirement Savings

Across the country, Americans have $1.75 trillion in student debt. Among the roughly 43 million borrowers, the average debt owed is around $37,000, but that can quickly rise due to appreciating interest and widespread economic turmoil.

For many Americans who don’t see a way out of their student debt and its building interest, retirement savings appear more like a fantasy than a planned reality.

Paul Walker, a financial expert and the author of A Money Book Anyone Can Read, said the student loan crisis comes down to a “financial literacy crisis.”

Once borrowers land themselves in debt, everyday pleasantries might be out of the question unless you want the debt relentlessly hanging over your shoulders.

“Pay off your debt. Period. End of story,” Walker told Newsweek. “Do not buy a new car. Do not take a vacation. Do not pay the minimum amount over 20 years. Do not buy holiday gifts using a visa card. Pay your debt then set aside 20 percent of your income for retirement.”

This widely accepted finance advice might seem difficult to follow for those facing down their student loan bills each month though.

According to the TIAA Institute, 84 percent of borrowers say that student loans negatively impact their ability to save for retirement.

Michael Ryan, a finance expert who runs michaelryanmoney.com, said Gen X-ers—those born between 1965 and 1980, like Kate—are often feeling these pressures more intensely than others.

That’s because Gen X-ers still maintain financial obligations to their children and aging parents, often putting their own retirement savings on the back burner.

“Prolonged debt stress takes psychological and physical tolls as well,” Ryan told Newsweek. “And systemic impacts to pensions, Social Security, healthcare and more from lower tax revenues could be profound.”

State of Student Debt in America

While payments on federal student loans was suspended in the early months of the COVID-19 pandemic by the Donald Trump administration, borrowers are now seeing normal bills resume. The break was extended multiple times, but it officially came to an end on October 1, 2023.

Since then, President Joe Biden approved $5 billion more in federal student loan forgiveness to those who have worked 10 years or more in public service and people repaying their loans for at least 20 years who haven’t been able to get help through income-based plans.

Altogether, 74,000 more borrowers will see relief.

The president’s prior plan to cancel student loan debt was overruled by the U.S. Supreme Court last June. That plan would have seen forgiveness for up to $10,000 in debt for those making less than $125,000 a year.

Nationally, more than 3.7 million Americans have seen student debt forgiveness. Biden originally made student debt forgiveness a pillar of his platform during his campaign.

“From day one of my administration, I vowed to improve the student loan system so that a higher education provides Americans with opportunity and prosperity—not unmanageable burdens of student loan debt,” Biden said in a statement. “I won’t back down from using every tool at our disposal to get student loan borrowers the relief they need to reach their dreams.”