Student Loan Debt Has Minimal Impact on Retirement Savings

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The value of median retirement assets for participants with student debt at age 30 is $10,075 and the same for those without student loans is $10,680, according to a new report.

Americans are looking at record-high student loan debt. According to a study by the Center for Retirement Research at Boston College, 70% of graduates have student loans averaging $30,000. In 1993, 47% of students graduated with loans averaging $10,000. This trend raises questions about how student loan debt is affecting retirement savings for employees and to what extend they may compensating by either cutting savings or consumption.

The CRR pursued some of these questions by focusing on 30-year-old working graduates in employer-sponsored retirement plans. However, the firm found that the estimated relationship between student loans and plan participation is small and “statistically insignificant.” The study also found that 55% of respondents with student loan debt are plan participants, while 42% of participants don’t have student loans.

Furthermore, the research indicates that individuals with larger loan balances are more likely to accept employer-sponsored retirement plans.

The CRR says, “This lack of a relationship between student loans and retirement plan saving suggests that the detrimental effect of student debt manifests itself either through reduced consumption or other reductions in net worth, such as credit card debt.”

According to their research, participants with student loans have higher levels of debt from other sources. The CRR points out that 30-year-old graduates with loans have median debt levels of $7,500. For those without student loans, the level is $3,000.

The research also examines student-loan holders who aren’t graduates.

The CRR reports that among non-graduates who attended college, those with student loans had a median non-student debt of $4,500 at age 30, compared to $1,750 for non-graduates without student loans. The research also found that 40% of respondents who have student debt but no degree are retirement plan participants, while 31% of non-degree holding respondents with student debt are not.

The median level of retirement assets for respondents with student loans and no degree is $5,874. The median level of retirement assets for those who attended college but have no student loans or degrees at age 30 is $7,252.

“How Does Student Debt Affect Early-Career Retirement Saving” by the CRR uses the “National Longitudinal Survey of Youth 1997 Cohort,” a large sample of workers turning 30, which includes detailed controls including school quality, parental background, and the underlying ability of the college attendee. The CRR analysis focuses on participation in an employer-sponsored retirement plan and retirement assets as of age 30. It can be found online here.


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