New Report: More and More Seniors Burdened by Student Loans
A new report from the Consumer Financial Protection Bureau reveals a startling statistic: the number of older Americans burdened by student loans they assumed on behalf of their children and grandchildren has increased four-fold over the past ten years. Student loan debt owed by people 60 and older now amounts to nearly $67 billion – and climbing.
This sobering article just published in the Washington Post details this growing concern, describing a debt load on well-intentioned seniors that the article calls “staggering.” There are now more than 2.8 million borrowers aged 60 and older affected by student loans, up from about 700,000 in 2005. “The skyrocketing cost of college has placed a particular burden on older Americans,” says the Post article. Many of these seniors are already “struggling to pay back growing debts in their retirement years, according to the (government) report. Nearly 40 percent of federal student loan borrowers over age 65 are in default, the highest rate for any age group.” Borrowers over 65 represented more than one-third of all student loan defaults in 2015.
In other words, the crushing problem of student loan debt, which now totals nearly $1.4 trillion in the U.S., is not just a problem for younger workers and recent graduates. It is, says the Consumer Financial Protection Bureau, “an intergenerational problem.” The Washington Post article explains that “a slow job market recovery, growing income inequality and stagnant wages have made it difficult for younger Americans to be economically independent, and now there are signs that those financial struggles are dragging down their parents and grandparents as well.”
A growing number of seniors tell researchers that they have had to forego medical treatments and cut back on other essentials because of the pressures of student loan debt. Even more ominously, more and more seniors are reporting that their Social Security payments – the only source of retirement income for more than a third of older Americans – have been partially seized in order to satisfy demands for student loan repayments.
On top of the mortgages and other loans still carried by many seniors, student loans add a heavy load. The average borrower 60 and older with a student loan owes $23,500, about twice the average amount from a decade ago. Besides the slow economy, experts blame the debt hike on skyrocketing costs of college and the pressure to get an education. The College Board estimates that a four-year degree from a public college or university now costs more than $80,000 – and for a private school the total is more than twice that amount. “Increasingly,” writes the Post, “older borrowers are being taken by surprise by student loan debt, according to financial advisers. Often parents and grandparents co-sign loans — the majority of student loans are co-signed by people age 55 and up — assuming they’ll be off the hook once the borrower graduates from school and lands a job. But increasingly, that’s not the case.”
If you’re facing pressure from your child or grandchild to co-sign a student loan, we strongly urge you to put the brakes on the conversation until you’ve met with a qualified retirement planner like those of us here at AgingOptions. If you’ll call our office we will be glad to suggest some strategies to help you make the right decision. It’s essential that you understand the huge problem represented by these burdensome debts! Instead of feeling obligated to co-sign, you may be able to suggest other options for your loved one to finance their education, including attending a less expensive school or working while they matriculate. No matter what, we urge you not to agree to take on the costs of someone else’s education until you’ve talked with an expert – because only then can you decide what to do, and make the decision with your eyes wide open.
Retirement planning is filled with important decisions. How can I protect my assets so I don’t outlive my funds? Where’s the best place for me to live as I age? What are the appropriate choices for my medical care needs? Are there certain legal preparations and processes I should pay attention to as I age? How can I make sure my family is knowledgeable and supportive of my wishes? In the past you may have had to consult several different professional services to get the right answers to these and other retirement-related questions, but no more. All these now are part of a breakthrough planning process we call LifePlanning. Your LifePlan, prepared with the supportive guidance of the AgingOptions team of experts, becomes your blueprint as you build the secure and fruitful retirement you’ve always hoped for.
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(originally reported at www.washingtonpost.com)