Millions of Gen X lives are still dictated by student debt
- Millions of Gen Xers in their 40s are struggling with student loans, just like Millennials and Gen Z.
- Insider spoke with two women in their 40s about how their student loans affect their lives.
- They may both be eligible for a rebate under a federal program, but that hasn’t happened so far.
- Read more stories from Personal Finance Insider.
According to a 2022 report from the Education Data Initiative43% of students nationally report having incurred student debt.
While most student debt news stories focus on Millennials and Gen Z tackling or avoiding student debt, Gen Xers in their 40s and 50s still struggle to keep up with monthly loan payments. student.
Indeed, millions of Gen Xers still live with heavy student debt. According to a 2022 report by Federal Student Aid, there are 11.4 million borrowers between the ages of 35 and 49 with a total of $502.6 billion in federal student loan debt. Even former President Barack Obama and first lady Michelle Obama didn’t finish paying off their student loans until they reached their 40s, reports CNBC.
What it’s like to live with student debt in your 40s
In Georgetown, Texas, Vivian Perez, 41, earns $50,000 a year and has a federal student loan balance of $91,347, according to records seen by Insider. His typical monthly student loan payment is $500, although his payments are currently on hold due to the pandemic. Perez tells Insider that she started pursuing pre-pharmacy studies at age 18, but then changed her mind to study biology. Perez took out student loans to cover his tuition, room and board, and a meal plan offered by the school.
In Beaufort County, South Carolina, Brandy D. Leo, 47, has a similar story. According to records seen by Insider, Leo earns $67,000 a year, while her federal student loan balance is $120,984 with monthly payments of $648 which she continues to pay.
Leo says, “I was working and living penny to penny, especially during undergraduate when I was serving tables. I really felt like the only way to stop living on paycheck to the other was going to college and being able to get a degree. Plus, I knew I couldn’t have access to retirement or healthcare if I didn’t go to college.”
Twenty years after graduating from college, Perez and Leo still feel helpless when it comes to paying off their student loans.
They may both be eligible for a pardon, but have not been granted it so far
Because of his experience working in public education and nonprofit organizations, Perez is technically eligible for the Public Service Loan Forgiveness Program, which gives borrowers who work in the public sector a forgiveness after 120 payments. eligible (about 10 years of regular work).
Perez says she tried to get her student loans canceled through the PSLF, but struggled to prove her eligibility because she jumped from one school district to another. . She adds, “It’s a lot of paperwork, and I’m still trying to figure it out right now.”
Leo, a licensed social worker who has worked with nonprofits since 2006, had a similar experience. She applied for the PSLF in 2018 and was rejected because, according to the administrators of the program, her previous payments were not eligible. She tells Insider, “I had no idea. I was making all my payments consistently until they offered me forbearance due to COVID.”
Leo adds that starting her college career before the abundance of information on the internet was available put her at a disadvantage. She told Insider, “My young adulthood was in the 90s, so that was before the internet. I just didn’t know what I was doing and certainly didn’t realize the long-term ramifications.”
They can’t afford a home in today’s market because of their debt
In 2015, Leo bought her first house and she was accepted into a competitive graduate program that would allow her to get a better paying job. That same year, she was diagnosed with breast cancer. Although she has insurance and paid medical leave, she has accumulated credit card debt to cover the cost of copays and other miscellaneous medical bills.
Four years ago, she made the difficult decision to sell her house and move in with her elderly mother to facilitate her care. With his work options stunted by the pandemic, Leo isn’t sure if he’ll ever own a home again, especially with his high debt ratio.
The debt-to-income ratio is the amount of debt a person owes relative to their annual income. The debt-to-income ratio is one of the determining factors lenders consider when approving someone for a mortgage.
Perez is in the same boat. Two years ago, she spoke with a real estate agent about buying a house, but the real estate agent told her that her debt ratio was too high and that she would probably be refused a loan. She adds, “Just looking at your friends and knowing they have these big houses and they didn’t go to college, does it feel like I did this all backwards?”
They can barely make ends meet
Today, Perez works at Western Governors University, a non-profit university where students can earn a bachelor’s degree for $7,290 per year and a master’s degree for $7,570 per year. She decided to get her MBA while working for WGU, which offered her a 75% tuition discount. “I actually pay my tuition every month because I can afford it. They literally take it out of my salary, which is great,” she says.
On her existing loans, however, Perez was told she would have to start paying $500 a month when the pandemic pause ends. “I can’t afford it,” she said. Although the hiatus was recently extended until August 31, 2022, Perez said she is still working out how she will make room for those payments. She said she saw a movie with friends or went out to eat once in a while, but there was “not much” to cut back to make room for her $500 monthly payments.
Meanwhile, Leo makes regular monthly payments of $648. Apart from student loans, Leo also has credit card debt that she accumulated while receiving treatment for breast cancer.
Between caring for his elderly mother and financially recovering from his debts, Leo has “very little wiggle room” in his budget for emergencies. She adds, “I’ve always been in survival mode. Some of that is my personal responsibility, but I just didn’t have anyone to coach me or guide me.”