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--:-- Jessica Mendoza: Welcome to The Journal, our show about money, business, and power. I'm Jessica Mendoza. It's Thursday, October 2nd.
--:-- Ryan Knutson: [in the background, briefly] Hi, I'm Ryan Knutson.
--:-- Jessica Mendoza: Coming up on the show, how student debt is strangling Gen X. Optimism isn't sunshine and rainbows. It's fixing things, changing the way we fix things. It's running the world on smarter energy. Because if optimism never stops, then change can't either. GE Vernova, the energy of change.
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--:-- Jessica Mendoza: The borrowers with the highest average student loan balance of any age group are those aged 50 to 61. They owe an average of just under $50,000 in student debt. I'd like to understand how we got to this point. Where does the story begin?
--:-- Oyen Adedoyin: The opening scene is in 1965. Today, then, we embark on a new adventure in learning. 1965 was the year President Lyndon B. Johnson signed the Higher Education Act. It was also the year the first members of Gen X were born. Proud to have a part in the beginning that this bill provides. The law provided opportunities for the federal government to give financial aid to students directly, to give scholarships, but also to provide student loans.
--:-- Jessica Mendoza: Maybe you come from a lower income household, but you get into a really nice college, you graduate with a degree, and you can qualify for a high-paying job. And so suddenly you have kind of skyrocketed yourself into a totally different financial landscape.
--:-- Oyen Adedoyin: Like we will help you get the money to finance your education and through that we will see all of us sort of like lift up together.
--:-- Jessica Mendoza: LBJ's Higher Education Act was essentially a promise. Take out a loan, go to college, and land a better-paying job with that degree. And the debt? No big deal. You can quickly pay it off. Gen Xers were the first generation to really test that theory.
--:-- Oyen Adedoyin: The way I see it, Gen X were kind of this experimental generation. Right when they were coming up and graduating from high school, these loans were available. They had been around for about a decade. The generation before them, baby boomers, didn't take out student loans in the same way, in part because fewer of them went to college. And for those who did try to get a degree, it was a lot more affordable.
--:-- Jessica Mendoza: Between 1975 and 1995, the cost of college roughly quadrupled. Still, Gen Xers were encouraged by their parents to go to college, no matter what. When I talked to Gen Xers, you know, they felt like college wasn't a choice. They felt like in order to be successful, they had to get a degree.
--:-- Oyen Adedoyin: That's what their parents told them. That's what Rick Bettenker was told, too. He's the chiropractor we heard from earlier. Back in his day, he says, college was the only way to climb the socioeconomic ladder. Back then, you had to go to college. Either you go to college or you're, you know, there's nothing for you to do. Maybe trade school, stuff like that.
--:-- Jessica Mendoza: My parents are first generation here from Columbia. And they understood that college was great and it was important. And everybody knew college was the thing.
--:-- Oyen Adedoyin: For a lot of Gen Xers, taking out student loans became the norm. Between 1990 and 2000, when many Gen Xers were in college, the national student debt balance more than doubled. More people wanted to go to college, and the federal government started to expand access to these loans. So more people started taking out more loans and more expensive ones. And they were pretty easy to get.
--:-- Jessica Mendoza: Student loans are a really unique financial instrument. So it's not like a credit card or something, right, where they check your credit score before they give you access to a loan. Teens, 17, 18, can take out a student loan for their college education. But student debt was considered good debt. Like buying a home, it was considered to be debt that was building your wealth.
--:-- Oyen Adedoyin: I'm still sort of surprised, speaking for my generation, the millennials, I'm still quite surprised that Gen X has the highest average student debt compared to millennials because it's such a big talking point today. Millennials are often the ones mentioned first. Why is Gen X doing worse than millennials?
--:-- Jessica Mendoza: Less Gen Xers hold student loans compared to millennials. It's just those who have those loans tend to have a higher balance on average because, you know, the time they've had those loans means that the interest on those loans has just continued to roll over on itself compared to maybe millennials who have had the loans for less time.
--:-- Oyen Adedoyin: And those loans can follow you all your life. They're hard to get rid of, even in bankruptcy. It kind of makes it this sticky financial device that really stays with you, even if you find that you are having a really hard time paying it off.
--:-- Jessica Mendoza: Rick, for instance, he's had student loans for a long time, 26 years. He got his bachelor's degree without needing to take out loans and was the first one in his family to go to college. After graduating, he worked as a personal trainer for a few years. And I wanted to take it to the next level. Chiropractic just kind of caught my eye.
--:-- Oyen Adedoyin: He toured a chiropractic college in California in the mid-90s. He was drawn by the campus, the curriculum. The students seemed happy. A tour guide encouraged him to take out loans to finance his degree. Rick eventually borrowed nearly $75,000 in federal student loans.
--:-- Jessica Mendoza: But it's not like they sat down and said, listen, this is what your interest rate is. This is what your loans are going to end up. It was just, don't worry about it. Sign here. When you graduate, you'll worry about it.
--:-- Oyen Adedoyin: Throughout the 2000s and 2010s, Gen Xers like Rick were starting families, buying homes, and expenses were piling up. And so student debt was falling down their list of priorities. In Rick's case, he needed money to start his own chiropractic business. So he put his loans in forbearance.
--:-- Jessica Mendoza: Forbearance is a legal payment pause. The way it generally works is you don't have to pay down the loans but they still accrue interest. Rick wasn't always in forbearance but when he did pay his loans, his payments weren't enough to beat the interest.
--:-- Oyen Adedoyin: It was almost like, one step forward, two steps back. So I would be in and out of plans because, you know, in the beginning, the first 10, 15 years, some years were okay, and I could do a year or two of repayment. Some years were low, and I would call and say, what should I do? And they would say, well, put it in forbearance, put it in deferment.
--:-- Jessica Mendoza: The company that recommended he go that route was Navient, Rick's loan servicer. Rick says his servicers guided him into forbearance multiple times, and it's a large part of why his student loan balance continued to grow.
--:-- Oyen Adedoyin: The Consumer Financial Protection Bureau later claimed that Navient misled borrowers and processed payments incorrectly. Last year, the Bureau banned the company from servicing federal student loans. Navient agreed to pay a $120 million fine, but said it didn't agree with the CFPB's findings.
--:-- Jessica Mendoza: But Rick says he was following the rules. I never defaulted. I was never late with a payment. You know, I have a perfect history.
--:-- Oyen Adedoyin: He says that over the years, he has more than paid down what he initially borrowed. Did you accrue other debt besides student debt?
--:-- Jessica Mendoza: No, other than my mortgage and my cars, which are almost paid off, I don't have any other debt, just the student loans.
--:-- Oyen Adedoyin: I try to be really good with my credit. I try to pay things off as soon as I buy them. Or if I have a balance, I'll, you know, let's pay that off in six months or something like that. So really, student loans is the only thing that's left. That's the only burden on me.
--:-- Jessica Mendoza: When you think back to those years, you know, those early years when you're going into grad school and they said, just sign here, here and here and you'll be fine. Don't worry about it. It'll all work out. How do you feel about that advice now?
--:-- Oyen Adedoyin: You know, I'm not happy. But at the same time, I take responsibility as an adult. And I do put some blame on them for the whole thing being very, very easy to do and with no guidance. But at the same time, I'm an adult. You know, I was an adult and I have to take responsibility for that.
--:-- Jessica Mendoza: Recently, there's something else that's made it harder on borrowers like Rick. The shifting policies out of Washington. That whiplash is after the break.
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--:-- Jessica Mendoza: To get a federal student loan, you have to sign something called the Master Promissory Note. The master promissory note basically states that the federal government can change the rules on you if they see fit. That little bit of fine print means that borrowers are especially vulnerable to sudden changes in policies around student loans, which is exactly what's been happening in the last five years.
--:-- Oyen Adedoyin: At the beginning of the pandemic in 2020, President Donald Trump paused repayments for student loans. Then, President Joe Biden went bigger, promising student loan forgiveness. Folks, I'm happy to have been able to forgive these loans, because when we realize and relieve Americans of their student debt, they're free to chase their dreams. But that didn't work out. Biden's student loan forgiveness plan was ultimately struck down by the courts.
--:-- Jessica Mendoza: Still, during the majority of Biden's term, student debt repayments were on pause. Then in January Trump took office for his second term. So the Trump administration comes singing a very different tune when it comes to student loans. There is an aggressiveness.
--:-- Oyen Adedoyin: And the Trump administration has really launched a campaign to urge borrowers back into repayment by any means necessary. Here's Education Secretary Linda McMahon speaking on Fox Business earlier this year.
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--:-- Jessica Mendoza: There isn't going to be any loan forgiveness program. As, you know, the White House press secretary said this afternoon, there's no such thing as loan forgiveness. It just gets transferred to someone else, and that's just not fair.
--:-- Oyen Adedoyin: Borrowers who miss repayments are now at risk of having their wages taken directly from their paychecks, and people's credit scores can drop because of overdue repayments.
--:-- Jessica Mendoza: Like many people, Rick has struggled to keep up with these changes. The federal government encouraged borrowers to consolidate their loans in order to qualify for loan forgiveness. Rick did that, hoping to have his loans forgiven under Biden's proposals.
--:-- Oyen Adedoyin: But consolidating loans means that your unpaid interest gets added to your principal, and then interest continues to accrue on that new balance. That was what pushed Rick's debt to over $300,000.
--:-- Jessica Mendoza: And with the policy changes under Trump, Rick is stuck in limbo. How does this make you feel?
--:-- Oyen Adedoyin: It makes me feel terrible. You know, I feel like a yo-yo. Every time they change the law, they'll add new payment plans, they'll offer an adjustment, they'll stonewall forgiveness.
--:-- Jessica Mendoza: Rick says his student loans have had other consequences on his life. He says he recently applied for a home equity loan and was rejected because he owed so much money in student debt.
--:-- Oyen Adedoyin: Now, at 55, Rick is approaching retirement age, like many other Gen Xers. I didn't put away anywhere near as much money as I should for retirement. I'm nowhere near what my target should be for my age. So all the money that I should have been putting into retirement for 25 years, I was, you know, putting them into my student loans and just chasing that interest, chasing that interest, even though the principal was already paid off.
--:-- Jessica Mendoza: Today, many Gen Xers are passing down a skepticism toward higher education to younger generations. According to a recent Gallup poll, fewer and fewer Americans see the value of college. In 2013, 70% of Americans said a college education was very important. In 2025, that number plunged to 35%.
--:-- Oyen Adedoyin: Rick has two kids who are 13 and 8. He would like them to go to college, but he's also much more open to his children taking another path. Like if my son says, hey, you know, I want to be a plumber. I think that's great. Get a couple vans. You know, those guys do great, and they're sure as hell not cheap.
--:-- Jessica Mendoza: If college is their path, Rick wants his kids to know what they're signing up for. Well, we're going to work really hard on grants and scholarships for them. That's going to be the number one thing. They're probably going to have to work through college. And I advise them to do two years of a state or a local school first. And then if they want to, then transfer to the big name. And, you know, we talk to them about student loans and what they have to be careful of.
--:-- Oyen Adedoyin: In a word or in a sentence, how would you describe your journey with student debt?
--:-- Jessica Mendoza: In a word, I would say calamity.
--:-- Oyen Adedoyin: Do you regret it?
--:-- Jessica Mendoza: No, I don't regret it. Because I love what I do, and I've had a good life, and I'm very happy, and I think I have a lot of happy memories. But I would have definitely done things differently, absolutely.
--:-- Jessica Mendoza: Hindsight is 20-20. That's all for today, Thursday, October 2nd. The Journal is a co-production of Spotify and The Wall Street Journal. If you like our show, follow us on Spotify or wherever you get your podcasts. We're out every weekday afternoon. Thanks for listening. See you tomorrow.
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