More people are entering retirement with unpaid student loans
The number of older Americans carrying student loans into retirement has skyrocketed over the past decade.
When people think of student loan debt they often think of it as a problem that only affects young people and those recently out of college. However, as Forbes reports, older Americans are also facing student debt challenges of their own, with the number of people aged 60 and over still carrying student debt skyrocketing in recent years. The figures are alarming and suggest that many older Americans will struggle to enjoy their retirement because they are still mired in trying to pay down student loans.
Student debt among seniors
The federal Consumer Financial Protection Bureau (CFPB) recently released a report about the number of older Americans who continue to carry student loan debt. In total, older Americans owe $66.7 billion in student loans. Between 2005 and 2015, the number of people aged 60 and over who owed student debt ballooned from 700,000 to 2.8 million. Furthermore, the average student debt carried by that same age group nearly doubled from $12,100 to $23,500.
Older Americans are also much more likely to be struggling to pay back student loans than younger Americans are. The same report found that in 2015 that while 17 percent of student loan borrowers aged 49 and under were in default, 37 percent of student loan borrowers who were 65 and older had defaulted on their student debts. Also, 40,000 people aged 65 and over had their Social Security benefits garnished to pay their student loans in 2015, up from 8,700 in 2005.
Struggling to save for retirement
As MarketWatch reports, much of the problem is not so much because older Americans are still carrying student debt from when they attended college decades ago, but because parents are carrying the debt for student loans that were used to finance their children’s education. Many student loans require students obtain a cosigner, which is often the parent. When the younger borrower can no longer pay his or her student loans, it often falls on the parents to keep up with the payments.
Older borrowers also often report difficulties working with servicers to work out a repayment plan. Because many older borrowers are unable to reach an effective repayment plan with the servicer, their Social Security benefits often end up being used to offset student loans payments. As a result, many older Americans find themselves either struggling to save up for retirement or struggling to support themselves after they have already retired due to student debt.
Student debt relief
Student debt is a problem that affects people of all ages, as the above article shows. While student debt is often not dischargeable, there are ways to use bankruptcy to better manage one’s student debt. An experienced bankruptcy attorney can help individuals who are struggling with student loans and other debts understand how bankruptcy may be able to work for them.