Student loans leave less time to build wealth

The rapidly rising costs of going to college are threatening the future retirement hopes of younger generations in ways their parents and grandparents never had to grapple with, according to

a new report from AARP. When the oldest baby boomers entered college in the mid-60s, the annual published cost of attendance at a four-year public university was $951—or $7,256 today when

adjusted for inflation, the study says. But today's incoming college students face published average costs of $19,000 a year at public, four-year schools, more than two-and-a-half times

the amount boomers faced. These higher prices lead many families to borrow, saddling students and recent graduates with debt that poses a major threat to their financial security when they

retire, the study says. “[I]f borrowers’ loan payments partially crowd out retirement savings during the first 10 years of work, they will face retirement account balances that are up to 39

percent lower than for recent graduates without debt,” the AARP report says. In decades past, the thinking went that “if you just work hard enough” in college, “opportunity will be available

for you,” said Joni Finney, a scholar on higher education at the University of Pennsylvania. “I'm just not sure that's a good answer for this generation." The rate that

college costs are rising has accelerated over the years, according to the AARP report. For example, when the first Gen Xers went to college in 1983-84, they confronted costs that were 11

percent higher than the first boomers did in 1964. But when the first millennials enrolled in college in 1998, costs had climbed another 45 percent over what Gen X encountered. And

Generation Z arrived on campuses in 2015 to prices that were 65 percent higher than the first millennials paid. "College today isn't something that many students and parents can

easily cover out of pocket, save toward, or pay for through work,” said Joe Valenti, author of the AARP report. “The benefits of a degree are there, but increasingly require borrowing."

"As recent graduates struggle to address their student loan debt as the result of these increased costs, they will face added financial burdens as they age,” the AARP report said. The

ability to contribute to retirement plans is potentially one sacrifice that can result from stubborn loan debt.