Student loans may be delaying retirement for many older Americans
We often think of student loan debt as an issue that only affects young people. Unfortunately, that is not the case. According to recent reports, the fastest-growing age group for student loan debt is people over 60. Currently, that group owes a total of $43 billion in student loans, and nearly 10 percent of them are at least 90 days delinquent on their loan debt. To compare, the number of over-60 debtors that were behind on loans in 2005 was just 6 percent.
It is not completely clear whether over-60 debtors have accumulated student loan debt themselves, by going back to school or seeking additional degrees late in life, or whether they took out or co-signed loans for their children or grandchildren. What is clear is that the growing debt is having an intensely negative effect on people who are near or at retirement age and are unable to afford to take their next step.
Student loan debt can have a disproportionate effect on older Americans, who have less time to repay their debts before they reach retirement age. As a result, more people are seeing their Social Security checks garnished by the government in order to pay a portion of their student loans. Nearly 120,000 people are currently experiencing this, and that number will likely grow in the coming months and years.
So what can be done to protect older Americans from the negative effects of student loan debt on their financial well-being and retirement plans? Making student loans dischargeable in bankruptcy would certainly help, but it seems that a broader reform of college costs and lending procedures is badly needed.
Source: AARP, “Student Loans Crushing Hopes for Some Near Retirees,” Carole Fleck, Nov. 12, 2012