Seniors Face Student Loan Debt Crisis
The student loan crisis in not only a problem for Millennials. Surprisingly, the fastest growing segment of borrowers is among those 50 and over, which have seen student loan balances quadruple. Total outstanding debt for rising seniors topped 183 billion dollars, an increase of 140 billion in the last ten years.
With the highest default rates of any age group, seniors challenged with student loan debt captured the attention of lawmakers, but they have taken little action to improve the circumstances of those entering retirement.
Why Are Seniors Borrowing Money for College?
Returning to school mid-career and taking out loans for children and grandchildren have led to an unprecedented number of seniors burdened with student loan debt into their 50’s and 60’s. When workers return to school when they are over 30, it can result in repaying loans for 20 or 25 years on the extended repayment plans, taking the borrower into retirement. Adding in periods of deferment, or default due to lack of payments, some borrowers have student loan debt beyond 70.
Long Term Financial Challenges for Older Borrowers
Increased debt balances during the highest earning years, lowers retirement savings, and can permanently impact the financial stability of workers preparing for retirement. A job loss, disability, or another life event that unexpectedly lowers wages can result in the inability to keep up with the loan payments. There are few ways to discharge outstanding student loan debt, leading to high rates of default among senior borrowers.
There is a 40% default rate for seniors over 65 and 13% of borrowers over 50 will die with outstanding loan balances. Unfortunately, defaulting on student loans can lead to the garnishment of Social Security checks, which further erodes their ability to live above the poverty level.