Increasing Numbers of People Over 60 Struggling to Pay Off Student Loan
The number of people who are 60 years and older that are still paying off their student loans has quadrupled in the past decade. Currently, older Americans now represent the fastest-growing segment of the U.S. student loan market, according to a new report by the Consumer Financial Protection Bureau.
In 2015 there were more than 2.8 million Americans over 60 that had unpaid student loan debt, which is up from the 700,000 in 2005.
The majority of these loans were taken out by parents and/or grandparents to finance education opportunities for the younger generation, with 73% of borrowers over 60 reporting their student loan debt is owed “for a child’s and/or grandchild’s education.”
Private student loans often require the borrower to apply jointly with a co-signer, and more than half of co-signers are over 55.
In addition, the number of student loans has increased dramatically. Back in 2005, the average owed by borrowers over 60 was rough $12,000 in contrast, to 2015 where the average was more than $23,000.
The increase in both the frequency and amount of student loan debt has led to many financial issues for these older borrowers. The CFPB found many indications that the over 60 borrowers are struggling greatly to pay back the student loan debt as they move into retirement.
* An increased rate of late and missed payments by borrowers 60 and older
* A greater default rate amount the borrower 65 and older
* Forgoing basic health care needs more often than those without student loans
* A greater portion losing their Social Security benefits due to unpaid federal student loans
Often times, Social Security is the only source of income for 75 percent of those 65 and older. “This means that benefit offsets may impose a serious financial hardship for many of the affected older borrowers,” the report states.
The estimated student loan debt for the 60 and older borrower amounts to over $66.7 billion. The skyrocketing cost of college has placed a huge burden on the older Americans who are now in a very difficult position because of these loans.
“Student loan debt is clearly an intergenerational problem, and what we’re seeing is that this is, unfortunately, putting older consumers’ retirement at risk,” said Seth Froman, assistant director of the CFPB’s office for students. “Older Americans are struggling under the weight of student loan debt.”
While the slow job market recovery, growing income inequality, and stagnant wages have made it more challenging for younger Americans to be financially independent, these struggles are now dragging down their parents and grandparents as well.
“A larger portion of older student loan borrowers struggle to afford basic needs,” the report said, adding that older borrowers were increasingly likely to have skipped necessary doctors’ appointments and prescription medications because they couldn’t afford them.
“When you’re retired, you’re on a fixed income, and there are so many things that could go wrong – your house could get a leaky roof, you might need medical care – and it becomes very difficult for people to balance all of those expenses,” adds Maggie Flowers, associate director of economic security at the National Council on Aging in Arlington, Virginia.
For more information on what to do if you’re a borrower over 55, call us today at 800.940.8911.