Student debt is often thought of as a young people's problem, but it's becoming increasingly clear that it's also plaguing older Americans.
Between the second quarter of fiscal year 2017 and the first quarter of FY 2018, Americans aged 50 and older saw their federal student loan debt grow by about $18 billion, according to government data released this month. While that $18 billion is less than the growth in student loan balances among those ages 25 to 49-years-old, older borrowers' outstanding student debt increased at a faster rate during that period.
"It's a concern to see debt held by people in their 50s and 60s," said Robert Kelchen, a professor at Seton Hall University who focuses on higher education finance. "That means that either you're working longer to try to repay it or you're hoping that it will be forgiven."
Policymakers, advocates for older Americans and student loan borrowers, and the public at large have started to take notice of seniors' challenges with student debt, thanks in part to reports from the Consumer Financial Protection Bureau and the Government Accountability Office. The data released this month offers fresh evidence of this trend.
Now the AARP advocates for borrowers
The unique problems of student loan borrowers over 50 "needs to be part of a comprehensive discussion," about various ways to mitigate the nation's student debt problem, said Ryan Gruenenfelder, the director of advocacy and outreach for AARP Illinois. His organization, which works to advance the interests of those 50 and older in Illinois, threw its weight behind a law that requires student loan companies to be regulated by the state. The organization decided to support efforts to get that law passed because older Americans are increasingly a constituency affected by the actions of student loan companies.
"We don't have a lot of policy positions on this issue," Gruenenfelder said of student debt, "but we do have concern, just because of the impact on people over 50."
Many of the factors behind the growth in older Americans' student debt are the same as those fueling the increase in student debt more broadly: stagnant wages and rising college costs mean that loans are becoming increasingly necessary for financing higher education. The changing job market also means that attending some college is becoming increasingly necessary for workers to re-tool throughout their careers. But the experience of student debt is different among older Americans for a variety of reasons.
Has student loan debt held you back?
They're paying off their kids', grandkids' and their own loans simultaneously
For one, the source of their debt may come from a variety of different places, including loans they took on for their own education, loans taken on to help their children or grandchildren pay for college or loans they co-signed with their children. That can be particularly challenging because the options for paying back these loans vary, said Persis Yu, the director of the Student Loan Borrower Assistance Project at the National Consumer Law Center.
For example, federal loans that older borrowers take on for their own education can be forgiven, but that's rarely the case for federal loans borrowers take on, on behalf of their kids or private loans that they co-sign.
"The whole system is complicated already, but this is probably the culmination of all of the most complicated pieces put together," Yu said.
Social Security benefits are at risk
What's more, older Americans are facing particular financial pressures exacerbating the debt. For one, unlike 20-somethings, they typically don't have a long working life ahead of them where they can make money to pay off the loans. Once these borrowers enter retirement and are living on a fixed income it becomes harder to find the money to pay off the loans, particularly if they have other debt, like a mortgage, or face a medical or other emergency.
When older borrowers struggle to pay off their student loans, the consequences can be dire. The government can garnish Social Security benefits to pay back a defaulted federal student loan.
As policymakers and the public at large pay more attention to the challenges faced by older student loan borrowers, the discussion surrounding student debt more broadly is changing, said Yu.
"We are finally starting to see a shift in a conversation that's not exclusively focused on the kids," she said. "When I started doing this work around seven years ago, that was the big focus: 'these kids are taking out all this unsustainable debt.' And it's not just about kids, it's about whole generations of people struggling to finance education."