- 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 qualify for forgiveness under a federal program, but it hasn’t happened so far.
- Read more stories from Personal Finance Insider.
According to a 2022 report from the Education Data Initiative, 43% of college attendees nationwide say they’ve incurred some type of educational debt.
While most news stories about student loan debt focus on millennials and Gen Zers tackling or avoiding student debt, Gen Xers in their 40s and 50s still struggle to keep up with monthly student loan payments.
Indeed, millions of Gen Xers are still living with burdensome student debt. According to a 2022 report by Federal Student Aid, there are 11.4 million borrowers between the ages 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 were in their 40s, as reported by CNBC.
What it’s like to live with student debt in your 40s
In Georgetown, Texas, 41-year-old Vivian Perez earns $50,000 per year and has a federal student loan balance of $91,347, according to records viewed by Insider. Her typical monthly student loan payment is $500, though her payments are currently paused due to the pandemic. Perez tells Insider that she started pursuing a degree in pre-pharmacy at 18, but later changed her mind to study biology. Perez took out student loans to cover the cost of her tuition, room and board, and a meal plan offered by the school.
In Beaufort County, South Carolina, 47-year-old Brandy D. Leo has a similar story. According to records viewed by Insider, Leo earns $67,000 per year, while her federal student loan balance is $120,984 with monthly payments of $648 that she continues to pay.
Leo says, “I was working and living penny to penny, especially during undergrad when I was waiting tables. I really felt like the only way that I would stop living payday to payday was if I went to college and was able to get a degree. Plus, I knew that 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 back their student loans.
They may both qualify for forgiveness, but haven’t gotten it so far
Because of her experience working in public education and nonprofits, Perez is technically eligible for the Public Service Loan Forgiveness Program, which grants borrowers who work in the public sector forgiveness after 120 qualifying payments (about 10 years of regular work).
Perez says she tried to get her student loans forgiven through PSLF, but she had a hard time proving her eligibility because she job-hopped from one school district to the next. She adds, “It’s a lot of red tape, and I’m still trying to figure it out right now.”
Leo, a licensed social worker who has been working with nonprofits since 2006, had a similar experience. She applied for PSLF in 2018 and was rejected because, program administrators said, her previous payments weren’t eligible. She tells Insider, “I didn’t actually know about it at all. I was making all of my payments consistently until they offered the forbearance due to COVID.”
Leo adds that starting her college journey before the abundance of information on the internet became available put her at a disadvantage. She tells Insider, “My young adulthood was in the ’90s, so this was before internet. I just didn’t realize what I was doing and certainly didn’t realize the long-term ramificiations.”
They can’t afford homes in the current market due to their debt
In 2015, Leo bought her first home, and she was accepted into a competitive graduate school program that would allow her to get a better-paying job. That same year, she was diagnosed with breast cancer. Though she had insurance and paid medical leave, she racked up 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 home and move in with her elderly mother to facilitate her care. With her work options stunted by the pandemic, Leo is unsure she’ll ever own a home again, especially with her high debt-to-income ratio.
Debt-to-income ratio is the amount of debt someone owes compared to their annual income. Debt-to-income ratio is one of the determining factors that lenders consider when approving someone for a mortgage.
Perez is in the same boat. Two years ago, she spoke with a realtor about buying a home, but the realtor told her that her debt-to-income ratio was too high and that she would likely get denied for a loan. She adds, “Just looking at your friends and knowing that they have these big homes and they didn’t go to college, it’s like, did I do this whole thing backwards?”
They are barely making ends meet
Today, Perez works at Western Governors University, a nonprofit college 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 earn her MBA while working for WGU, which offered her a 75% discount on tuition. “I’m actually paying for my college tuition monthly because I can afford that. They just literally take it out of my paycheck, which is great,” she says.
On her existing loans, however, Perez was told she’d need to start paying $500 a month when the pandemic pause ended. “I can’t afford that,” she said. Though the pause was recently extended to August 31, 2022, Perez said she’s still figuring out how she’ll make room for those payments. She said she does see a movie with friends or go out to eat every now and then, but there “isn’t that much” to cut back in order to make room for her $500 monthly payments.
Meanwhile, Leo makes consistent monthly payments of $648. Besides student loans, Leo also has credit card debt that she accrued while receiving treatment for breast cancer.
Between caring for her elderly mother and recovering financially from her debts, Leo has “very little wiggle room” in her budget for emergencies. She adds, “I’ve always been in survival mode. Some of this is my personal responsibility, but I just didn’t have anyone coaching me or guiding me.”