The Insured Retirement Institute has voiced its emphatic support of a new bill to help more Americans learn about their options to get out from under the monumental burden of student loan debt.
Introduced by Rep. Teresa Leger Fernandez of New Mexico, the Financial Fitness Act would direct the Secretary of Education to create a centralized financial resources portal for federal student loan financial aid recipients on the Education Department's website.
It also seeks to expand the content of mandated financial counseling for federal student loan financial aid recipients. That includes broadening its financial literacy content to include information about planning and saving for retirement.
“Including counseling information related to retirement planning and savings in the Financial Fitness Act will introduce a valuable new resource for federal student loan financial aid recipients,” IRI said in a letter of support addressed to Representative Leger Fernandez.
The institute cited figures from the Federal Reserve in 2024, which showed student loan debt in the United States has skyrocketed to an astounding $1.77 trillion, a 66 percent increase over the past decade.
Student debt casts a long financial shadow for many Americans. In a study by Fidelity Investments, 79 percent of respondents stated that student loan debt hinders their ability to save for retirement. On average, those with student loan debt save 6 percent less for retirement compared to those without such debt.
IRI highlighted that while workers across all age groups are burdened with student loan debt, those older than 45 owe nearly 84 percent of the total debt. Its own research on millennial retirement readiness revealed that 46 percent of Gen Y investors are not saving for retirement, with nearly 10 percent citing the need to pay off debts before they can contribute to a retirement savings plan.
The letter pointed to Section 110 of the SECURE 2.0 Act of 2022, which offers a new avenue for individuals with student loan debt to start building their retirement savings.
With the educational portal updates proposed by the Financial Fitness Act, IRI said workers hampered by student debt can better leverage the benefits of the SECURE 2.0 Act, thereby enhancing their economic equity, financial security, and overall financial stability.
While fully supporting the Financial Fitness Act, IRI also encouraged Representative Leger Fernandez to amend the bill so that the information on the Department of Education’s centralized portal would also be extended to recipients of the Department of Labor job training and apprenticeship programs.
“This amendment is crucial to ensure that all new entrants to the workforce, regardless of their educational background or career choices, will have access to information that can guide their retirement savings decisions,” IRI said.
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