Photo (cc) by North Charleston
Student loan debt may be as big a problem for Grandma as it is for her grandkids.
A new report from the Government Accountability Office found that more U.S. seniors are swimming in student loan debt, and they’re more likely than their younger counterparts to become unable to make their loan payments.
The report said:
The percentage of households headed by those aged 65 to 74 having student debt grew from about 1 percent in 2004 to about 4 percent in 2010. While those 65 and older account for a small fraction of the total amount of outstanding federal student debt, the outstanding federal student debt for this age group grew from about $2.8 billion in 2005 to about $18.2 billion in 2013.
Those seniors often struggle to find the money to cover their student loan payments. About 36,000 older Americans saw their Social Security benefits garnished in 2013 because of defaults on their loans, forcing many of them into poverty.
“At least 22,000 Americans aged 65 and older had a part of their Social Security benefits garnished last year to the point that their monthly benefits were below federal poverty thresholds,” The Huffington Post said.
Seniors also have higher rates of default than younger counterparts. The report said:
Although older borrowers hold a small portion of federal student loans, they hold defaulted loans at a higher rate than younger borrowers. Individuals 65 or older held 1 percent of outstanding federal student loans in fiscal year 2013. However, 12 percent of federal student loans held by individuals age 25 to 49 were in default, while 27 percent of loans held by individuals 65 to 74 were in default, and more than half of loans held by individuals 75 or older were in default.
Although most of the student debt is their own, that’s not the case with all seniors. About 82 percent is for the seniors’ own education, and the rest was for their children.
The GAO report cautioned that the problem is not going to go away anytime soon.
As the baby boomers continue to move into retirement, the number of older Americans with defaulted loans will only continue to increase. This creates the potential for an unpleasant surprise for some, as their benefits are offset and they face the possibility of a less secure retirement.
I’ve been paying on my student loans for 13 years. I plan to have them paid off in seven or eight years, so I won’t face the hardships of being a senior still saddled with burdensome student loans.
Are you surprised that so many senior Americans are burdened with student loan debt? Share your thoughts below or on our Facebook page.