Over 60, And Crushed By Student Loan Debt (#GotBitcoin?)
Older Americans are struggling under the burden of student loans—their children’s and their own. Over 60, and Crushed by Student Loan Debt
One generation of Americans owed $86 billion in student loan debt at last count. Its members are all 60 years old or more.
Many of these seniors took out loans to help pay for their children’s college tuition and are still paying them off. Others took out student loans for themselves in the wake of the last recession, as they went back to school to boost their own employment prospects.
On average, student loan borrowers in their 60s owed $33,800 in 2017, up 44% from 2010, according to data compiled by credit-reporting firm TransUnion. Total student loan debt rose 161% for people aged 60 and older from 2010 to 2017—the biggest increase for any age group, according to the latest data available from TransUnion.
Some are having funds garnished from their Social Security checks. The federal government, which is the largest student loan lender in the country, garnished the Social Security benefits, tax refunds or other federal payments of more than 40,000 people aged 65 and older in fiscal year 2015 because they defaulted on student or parent loan debt. That’s up 362% from a decade prior, according to the latest data from the Government Accountability Office.
At 66, Ante Grgas-Cice owes about $29,000 in student loans. His only income is a roughly $1,600 monthly Social Security check, which the federal government garnished for a period last year because he wasn’t paying his student loans.
Mr. Grgas-Cice said his decision to go back to school continues to haunt his life.
He signed up for student loans to attend the Art Institute of New York City in 2003 and 2004, after a restaurant venture failed. At the Art Institute, he studied culinary art and restaurant design and layout to upgrade his skills, he said. Subsequent restaurant ventures didn’t work and he’s currently unemployed.
Struggling to keep up with his rent and other bills, he went to Croatia for the summer to live with his elderly mother. To pay for daily expenses, he relies on financial help from family and often turns to credit cards to pay for food and other necessities. He limits his food expenses to around $7 a day.
“I put all my money to better myself,” Mr. Grgas-Cice said, adding that he was cautious in his spending. He says it’s painful to think about his current conditions.
Student debt is one of the biggest contributors to the overall increasing debt burden held by seniors. U.S. consumers who are 60 or older owed around $615 billion in credit cards, auto loans, personal loans and student loans as of 2017. That is up 84% since 2010—the biggest increase of any age group, according to the TransUnion data.
The borrowing buildup has upended the traditional arc of adult life for many Americans. Average debt levels traditionally peak for families headed by people aged 45 to 54 years old, according to the Employee Benefit Research Institute based on data from the Federal Reserve’s Survey of Consumer Finances. But between 2010 and 2017 people in their 60s, like most other age groups, accelerated their borrowing in nearly every category, according to the TransUnion data.
Seniors are finding they have to work longer, holding onto positions younger adults might otherwise receive. They’re relying on credit cards and personal loans to pay for basic expenses. People 65 and older account for a growing share of U.S. bankruptcy filers, according to the Consumer Bankruptcy Project; unlike most consumer loans, student debt is rarely dischargeable in bankruptcy.
Perhaps the most surprising element of this surge is the rapid run-up in student loans, an issue that used to be mostly concentrated among young adults. Changes made in the wake of the last recession help explain the shift.
In the years after 2008 banks and other private student lenders began tightening underwriting standards for their loans, requiring more parents to sign on to student loans along with the student borrower. Cosigning makes the parents equally responsible for paying back the loan, resulting in a lower credit score and crimping their ability to borrow if they or their child miss a payment.
Roughly 93% of all new private student loan dollars extended to undergraduate students during the current academic year also included parent or other adults’ signatures on them, up from 74% in the 2008-09 school year, according to MeasureOne. Though federal loans still account for more than 90% of outstanding student loan debt, the private market for student loans has been growing.
In recent years, private lenders including SLM Corp. , better known as Sallie Mae, and Citizens Financial Group Inc., have increased their focus on parents. They’ve rolled out student loans that are just for parents who want to pay for their kids’ college education. The loans’ main pitch includes the possibility of a lower interest rate for parents who have high credit scores than what the federal government charges on its own parent loans; it also allows parents to spare their children the burden of debt by taking it on themselves. A spokesman for Sallie Mae says that parent loans accounted for around 2% of the student loan dollars the company originated last year. A Citizens spokesman says the majority of parent loans come from the federal program.
Another Problem: The federal government caps the dollar amount of loans that undergraduate students can borrow for college, but no caps exist for the aggregate amount that parents can take on. That has contributed to parents increasingly borrowing to cover the gap between tuition costs and the amount of free aid and loans their children receive.
The federal government disbursed $12.7 billion in new “Parent Plus” loans during the 2017-18 academic year, up from $7.7 billion a decade prior and $3.3 billion in 1999-2000, according to an analysis of Education Department data by Mark Kantrowitz, publisher of Savingforcollege.com. Its underwriting standards are generally looser than banks and other private lenders, making it easier for more applicants to qualify. Parents on average owed an estimated $35,600 in these loans at the time of their children’s college graduation last spring, according to Mr. Kantrowitz. They owed nearly $6,400 on average (not adjusted for inflation) in the spring of 1993.
One parent who falls into this category is Christopher Raymond of North Danville, Vt., who was a high-school history teacher for 32 years.
Mr. Raymond currently owes around $136,000 in Parent Plus loans that he signed up for to help pay for his two children’s college education.
The debt upended his retirement, forcing him to find new employment in order to pay the loans. Each month, he pays some $1,100—about a quarter of his monthly take-home income—toward the loans. His ex-wife, Lori Raymond, 56, pays an additional roughly $800 a month toward the loans. Unable to pay for emergency expenses, including replacing his broken stove and fixing his roof, he used a personal loan to cover those costs.
Mr. Raymond, 60 years old, believes he will be stuck paying this bill into his 70s.
“It’s a very dark cloud that’s
always in the back of my mind,”
His decision to sign up for the loans stems back to his own upbringing. Both of his parents lived through the Great Depression, and his mother who was a teacher and father who was a university professor instilled in him the belief that a college education was a ticket to a better life. When his daughter got accepted to Ursinus College more than a decade ago, he found it difficult to tell her it would be too costly to attend.
“How do you say to your child, ‘We insisted you work hard and go for the brass ring’ and ‘oops we can’t help you?’ ”he said.
His daughter received some grants and signed up for student loans. Mr. Raymond also signed up for loans to help pay the remaining college costs. Later on, when his son began college at the University of Maine, Mr. Raymond took out more loans.
Despite the burden, Mr. Raymond said he doesn’t regret giving his children the opportunity to go to college. He just wishes there was a way to make his monthly payments more manageable.
For seniors, adding student debt is not an isolated problem. When an older borrower has a student loan, it can often force that person to take on other loans, such as credit cards, to pay for everyday expenses.
Raymond Abdullah, 65 years old, has around $40,000 of credit-card debt and a balance of about $11,000 on a federal Plus loan he signed up for to pay for his son’s tuition about 22 years ago.
The credit card debt grew over the past decade after he retired from work as a jeweler. He finds himself turning to cards more often to pay for everyday expenses including gas and groceries. He says he needs to keep cash on hand to pay for other expenses, including the $400 monthly payment towards the college loan.
The debt, he says, “affects your blood pressure, it affects your overall well-being,” he said. “At this age you don’t expect to be in debt. It’s not where you want to be.”
Mr. Grgas-Cice, meanwhile, has found some relief. He consulted with Evan Denerstein, senior staff attorney at Mobilization for Justice, a civil legal services organization. The attorney helped enroll him in a federal payment plan that stopped the garnishment tied to his student loans. That plan allows people whose income is below 150% of the federal poverty guideline to technically be considered on time with their payments with the loan while making no payments toward it. As long as Mr. Grgas-Cice meets the requirements of the plan every year, his balance will continue to grow for 20 years and it will eventually be written off by the U.S. government. However, the debt that is forgiven may be taxable.
“I have no savings—what are they going to take from me?” he said.
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