When you think of student loan debt, the first thing that comes to mind is a new college graduate aged 22 to 34. A new government report suggests that the gray-haired senior population is also suffering from the shackles of student loan debt, and it may hinder their retirement plans.
The Government Accountability Office (GAO) released a report Wednesday that found student loan debt for seniors 65 and older rose by more than 600 percent from $2.8 billion to $18 billion between the years 2005 and 2013.
Although this is a substantial figure, especially for retirees living on fixed incomes, seniors still represent a small percentage out of all student debt holders. However, retirement experts are concerned because the number of seniors with student loan debt has quadrupled since 2004 to 706,000 households.
Seniors maintain two sets of student loan debts: one is a student loan they took out to pay for their college tuition (80 percent), while the other consists of the older adult taking out a loan for a child, dependent or a family member (20 percent).
Officials are worried about another growing trend for seniors with student debt: default.
The GAO study discovered that the default rate for Americans between 65 and 74 years of age was 27 percent, and at least 50 percent for those older than 75 – people aged 25 to 49 only maintained a default rate of 12 percent.
The long-term concern is that this debt can hurt an older person’s retirement. There are various consequences to a decades-old problem, including garnishment of Social Security payments, which is essential for millions of American seniors who rely on these monthly payments for their rent, healthcare, home-related costs, food and other expenses.
The GAO’s finding were the subject of a Wednesday U.S. Senate Special Committee on Aging.
With so many millennials suffering from high levels of student loan debt, could today’s youth be in the same predicament when they hit the retirement age? AARP expects the trend to persist.
“The median amount of education debt is rising for most age groups,” said Lori Trawinski, director of banking and finance for the AARP Public Policy Institute, in a statement. “We expect that trend to continue and that people over 50 will carry education debt as they age and the amount of that debt will also likely continue to increase.”
William Leith, chief business operations officer for Federal Student Aid within the Department of Education, listed a number of resources that are available for borrowers to the U.S. Senate. The government website presents various tools, calculators and repayment plan information. The Department of Education also offers assistance to troubled borrowers.
If you’re considering delaying paying off your student loan debt then think about CNN’s recent profile of Rosemary Anderson, who admitted to facing $152,000 student loan debt, despite nearing retirement age. She testified in Washington about how she borrowed $65,000 two decades ago to pay for her Bachelor’s and Master’s degrees. A number of circumstances – divorce, job loss and sick family members – prevented her from making payments.
Two in three American college graduates exit school with student loan debt.