The total amount of student loan debt held by Americans age 60 and older has increased dramatically in recent years, “upend[ing] the traditional arc of adult life for many Americans,” The Wall Street Journal reports. Between 2010 and 2017, the average amount owed on student loans by adults in that age group rose by 44 percent to $33,800, while the total student loan debt held by adults 60+ jumped 161 percent to $86 billion.
Repaying student loans for their children—and for themselves
According to the Journal, the surge in student loan debt held by seniors stems in part from that generation’s return to school following the recession, as they sought to improve their job prospects. It also reflects a tightening of underwriting standards at banks and other private lenders across the last decade, restrictions that led more parents to cosign student loans for their children’s education.
The federal Parent PLUS loan program, meanwhile, has contributed to the increase in parents financing their children’s college education; the program disbursed $12.7 billion in new loans during the 2017-18 academic year, up from $3.3 billion in 1999-2000. Created in 1980 to help middle-income families pay for college amid rising tuition and high interest rates, the Parent PLUS program offers loans free of the borrowing limits associated with other college loans.
Parent PLUS loans, however, also have higher interest rates than student loans, don’t have income-driven repayment options, and are typically seen as a last resort after exhausting other kinds of aid and loans. They also have drawn attention for their rising five-year default rates, which jumped from 7 percent in 2000 to 11 percent in 2009.
‘Not an isolated problem’
“Adding student debt is not an isolated problem” for seniors, the Journal says, noting that seniors saddled with student debt may further accumulate credit card and personal loan debt in order to cover living expenses. They also are likely to delay retirement.
According to the Consumer Bankruptcy Project, Americans 65 and older make up a growing share of U.S. bankruptcy filers. The number of people in that age group, meanwhile, who had their Social Security benefits and other federal payments garnished by the federal government rose by 362 percent between fiscal year 2005 and fiscal year 2015, the Government Accountability Office reports.
The debt “affects your overall well-being,” Raymond Abdullah, 65, told the Journal. Abdullah, who owes about $11,000 on a federal Plus loan, added, “At this age you don’t expect to be in debt. It’s not where you want to be.”