Have you heard? It’s not just the millennials drowning in student loan debt. Surprisingly, It is the American Baby Boomers that are stealing the spotlight in this undesirable race. 

We often use terms like Generation X, Y and Z and the so-called “Baby Boomers”. Let’s not get lost in these terms, because they are about to become important.

Recently, the Millennials were in the centre of attention. There is even a colour called “Millennial Pink”. But do you remember the generation of Baby Boomers? They may not have their own colour, but now is definitely the time to pay more attention to this generation.

Baby Boomers was the original ‘generation’. And it was a useful label because, initially, it described those born in the immediate years after World War II, when there was – thanks to soldiers returning home – a significant spike in births, both in America and in Britain. Baby Boomers, as a phrase, was first used in 1970, in a Washington Post article. Ok, now that we got this straight, let’s remind ourselves of the Generation Z, the latest one. Demographers and researchers typically use starting birth years that range from the mid-1990s to early 2000s, and as of yet there is little consensus about ending birth years. Either way, these are the kids too young to remember 9/11, they have grown up in a world in political and financial turmoil and are currently attending university, to the most part. One may argue that they are keen to look after their money, and make the world a better place.

But do they care about the financial side of things, really? Because according to some recent statistics it is the Baby Boomer generation that is carrying much of the student loan debt of the Generation Z.

So let’s look at some juicy stats, shall we? (trigger warning: these are not for the sensitive to economic bubbles)

As of the end of 2015, per the latest available data from the New York Fed, Americans aged 18-34 held a massive $601.53 billion tab for higher education. Sounds about right, what is the issue then? Poor students are poor, as always.

Surprisingly, that same data also indicates that mom and dad (or grandma and grandpa in some cases) are shouldering more and more of these debts. From 2005 to 2015, the amount of student loan debt held by those ages 60-64 has increased eightfold, from $4.85 billion to $38.35 billion. For those aged 55-59, the increase is about fivefold, from $13.9 billion to $65.47 billion. And these older debtors are not exactly paying those loans off: 12.6% of debt held by 60- to 64-year-olds was in default at the end of 2015, a higher default rate than anyone under 40.


To back this up let’s now turn to the Fed, which reports that Americans in their 50s, 60s and 70s – the Baby Boom generation – are carrying unprecedented amounts of debt, a shift which according to the WSJ “reflects both the aging of the baby boomer generation and their greater likelihood of retaining mortgage, auto and student debt at much later ages than previous generations.”

Now, take a look at some more stats from the WSJ:

The average 65-year-old borrower has 47% more mortgage debt and 29% more auto debt than 65-year-olds had in 2003.

And the biggest shocker: there is an 886% (!!!) increase in student loan debt of Americans aged 65 and older.

And a little less of a shocker, to cool you down: as shown on the graph below, the aggregate debt of the average Baby Boomer has soared by an unprecedented 169%!


If you are not quite terrified yet, you may want to check out the website that shows the current student loan debt in the US. Go ahead and tickle your nerves. That thing runs in real time too! It is almost as scary as the real-time death rate calculator.

How about a bit of a flashback?

Remember the 2008 crisis, the real estate bubble, all the people who couldn’t pay off their debt? Take a look at this finding by the Wall Street Journal:

The WSJ compared the student loan mess to the subprime mortgage industry a decade ago, right before the 2008 crash. According to the analysis of data from credit-rating firm Equifax, 40% of student loans went to borrowers with credit scores below the subprime threshold of 620.

We might be facing a similar situation with the student loans if we don’t start paying attention. As it turns out, these loans are too connected to the housing market:

Research revealed that about 70% of homebuyers with student-loan debt aged 52 to 61 said their loans were $10,000 or more, with a median burden of $18,000. That’s only $7,000 less than the median amount owed by those 36 and younger.

Truthfully, there currently is little research on this matter. Although it is true that Boomers have been putting off their retirement for the sake of supporting their children’s education. They also postpone buying new property. Jessica Lautz, the managing director of survey research and communications for the National Association of Realtors, says:

“We know it’s the second largest sector of debt after mortgages. But many researchers tend to focus on crises that have already happened, and it is hard to get the data. If you’re looking at whether people are putting off retirement, the only way to do that is to actually ask them.”



The generation of Baby Boomers may not really be doomed. Most of the households with debt also have higher credit scores and more assets than in the past. However, there is a risk still: Greater borrowing among this age group could become alarming if evidence mounted that large numbers of people were entering retirement with debts they couldn’t manage. As pointed out by PwC partner Kent Allison:

Those [boomers] with lingering student loans are most likely the ones who don’t have the savings or the financial reserves to retire. They’re the ones who are still paying off loans instead of saving more for retirement.

So, if you thought the Millennials and Baby Boomers have nothing in common, think again. These two generations are going to be tied down by the student loans for the many years to come.


While the perspective of a yet another bubble may be a stretch, one thing is clear, the blissful retirement is off the check-list for many Baby Boomers. 


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