The clock is ticking for nearly 44 million Americans with outstanding student loans. Three in four said they will have trouble saving for retirement when payments resume next week, and the same number plan to cut back on spending.
"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 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."
Women expect to be especially hard hit, a new Corebridge survey found. Six in 10 women said they do not expect to be able to afford making payments in October, compared to 39% of men. Women (5%) also were three times less likely than men (16%) to have put their disposable income from paused payments toward retirement, which only compounds the situation.
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The survey comes on the heels of an Achieve survey earlier this month that found that 30% said they will delay saving for retirement and an August Empower study finding 42% of Americans saying they will consider curtailing retirement savings when student loan payments resume. In addition, one-fourth of consumers with student loan debt said it's their biggest financial regret, according to a Bankrate survey. At the same time, it found that stress has been rising for 57% of borrowers over the past year as the first due date since early 2020 draws nearer.
"Of course, the more money people put toward their student loans, the less they're likely to have left over for other purchases," Jacob Channel, senior economist at LendingTree, told Fortune. "Once payments are back in full effect, we'll probably see this more clearly on a macroeconomic level, and I don't think anyone should be surprised if consumer spending drops over the coming months."
Related: Student loan payments are resuming: It's time to roll out financial wellness benefits
Those who can't afford their payments have a few options. They can enroll in an income-based repayment program such as the new SAVE plan, which bases what borrowers owe on their household size and income, among other factors. As a last resort, borrowers can skip their payments for the next year without the usual negative consequences. The Biden administration announced a 12-month grace period during which borrowers won't be considered delinquent if they miss a payment and credit bureaus will not be informed.
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Alan Goforth
Alan Goforth is a freelance writer in suburban Kansas City. In addition to freelancing for several publications, he has written a dozen books about sports and other topics.
