How Student Loans Are Devastating the Sandwich Generation
September 13, 2013

If you’re fresh out of college or maybe a year or so down the road, you may already be frustrated with the burden of your student loans and wishing it was done and over. Now imagine yourself 25 years down the road, still paying on your loans because you couldn’t afford the 10 year standard plan. Pretty bad, right? Now imagine you’re still paying your loans and now you’ve got two kids of your own in college and you’re taking out loans to pay for their college as well. That’s the double whammy of student loan doom…

Sandwich generation woes

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For many, that’s their reality. At an age where they should be socking money away for retirement and paying down debts, instead millions of Americans are piling on loans to try and get their kids off to a good start in life. But what does this mean for their own futures when retirement is just around the corner and the money isn’t there to see them through their golden years?

Scary Stats About Student Loan Debt for Older Americans

• For those aged 50-59, over the past seven years, student loan debt has increased 330%

• For those aged 60-up, over the past seven years, student loan debt has increased 537%

A portion of this may be accounted for by rising balances due to extended payment plans, deferments and delinquencies which can see loan balances increasing due to capitalized interest and fees, but these skyrocketing figures are due to far more than that. These are new loans piled on old for parents and grandparents taking on debts for the youngest generation of college students.

For some, there’s a student loan trifecta where there are loans for themselves, their children and their children’s children! It’s far too easy to imagine generation upon generation so entrenched in student loans that they literally follow them to the grave.

Retirement delayed for too many

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Scary Stats About Overall Finances for Older Americans

• 46% of Americans aged 50 and older say they’re planning on postponing retirement.

• 30% or nearly one-third of Americans are now planning to work well into their 80s!

• 70% of Americans plan to work at least part-time after “retiring” from their primary career because they can’t afford to completely retire.

This generation is known as the “Sandwich Generation” because they’re the unfortunate meat in a responsibility sandwich. They’ve got young adults on one side that need help paying for college and are increasingly moving back home when they can’t support themselves. And on the other side are aging parents who can no longer physically and/or financially care for themselves and are relying on their also-aging children to help care for them.

Sandwich generation stressed from all sides

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What’s To Be Done for This Maxed Out Generation and Those That Will Follow?

It’s not just the 50 pluses that we’ve got to worry about, it’s those that are following after that will have less access to company-sponsored pension as these programs will continue to die out, questionable access to social security due to funding concerns and mounting student loan debts of their own. Pile onto that parents who are not setting money aside for retirement because they’re helping them and they’ll need to return the favor at some point.

So what’s to be done? Here’s some ideas that warrant consideration:

•  Allow both federal and private student loans to be more easily extinguished in bankruptcy

•  Expand Pell Grant awards so that students don’t need to borrow so much

•  Institute measures to incentivize colleges from continuing to raise tuition

•  Expand online programs from brick and mortar schools to allow students to matriculate from home for far cheaper than moving on campus

•  Make IBR and PAYE loan forgiveness tax free!

Why kids rely on parents financially

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